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U of M committee approves plan to lease downtown Rochester hotel for student housing

The Finance and Operations Committee of the University of Minnesota Regents unanimously approved an agreement to lease the DoubleTree Hotel in downtown Rochester as a housing facility for University of Minnesota Rochester students.

DoubleTree by Hilton
The DoubleTree by Hilton on Broadway Avenue South in downtown Rochester.
Post Bulletin file photo
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ROCHESTER — After hearing testimony from UMR Chancellor Lori Carrell, the University of Minnesota Regents unanimously approved an agreement to lease the DoubleTree Hotel in downtown Rochester as a student housing facility .

“This creative, smart opportunity does a real service for our students,” Carrell told the gathered regents this morning.

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She told them that current student housing for University of Minnesota Rochester students is at capacity and this lease will resolve that issue as well as providing meals for students.

The agreement translates to a cost of about $9,000-per-bed for the university.

A University of Minnesota plan to add more than 400 student housing beds in downtown Rochester would take about 200 skyway-connected hotel rooms out of the heart of the Med City.

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The university is agreeing to lease nine floors of DoubleTree Hotel by Hilton at 150 South Broadway to adapt the about 200 rooms to provide 400 student beds.

Rochester’s Titan Development and Investments, led by Andy Chafoulias, owns and operates the hotel.

The university is leasing floors 3 to 11 for $3.06 million annually for 12 years with the gross rent increasing 1.75% a year. The deal includes the university paying a pro rata share of real estate taxes and utilities, which is estimated at $1.01 million for the first year.

The hotel, which is managed by Chafoulias’ Avra Hospitality, would be required to make an estimated $7.63 million in renovations “to convert it from its current use as a hotel into a student housing and dining facility with ancillary recreational space.”

Under the agreement, Titan would provide "a full-service dining program for 3 meals a day, 7 days a week during the academic year.”

The lease is scheduled to begin this summer on Aug. 1, 2023.

This relationship is similar to UMR’s lease of 70 apartments at 318 Commons, which is also in downtown Rochester.

UMR also already leases the two top floors of Titan’s Galleria at University Square mall, across Broadway from the DoubleTree. The leasing of the former retail space in the mall for UMR classrooms started in 2007.

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This is agreement will be a significant change for downtown Rochester, which has added many new hotel in recent years as the city promotes the Destination Medical center initiative to bring more patients to Mayo Clinic.

Statement from Joe Ward, President, Experience Rochester and Mayo Civic Center

Joe Ward, who is the president of Mayo Civic Center and Experience Rochester, which promotes hospitality, did share some thoughts on the deal, which will remove about 200 prime, skyway-connected hotel rooms out of downtown.

"The DoubleTree hotel has played a significant role in our ability to attract meeting and convention business to the Mayo Civic Center," wrote Ward. "Its potential loss creates a significant challenge that we will work with our community partners to overcome, as one of our key responsibilities at Experience Rochester is to run a successful and financially sound Mayo Civic Center."

Jeff Kiger tracks business action in Rochester and southeastern Minnesota every day in "Heard on the Street." Send tips to jkiger@postbulletin.com or via Twitter to @whereskiger . You can call him at 507-285-7798.

Jeff Kiger writes a daily column, "Heard on the Street," in addition to writing articles about local businesses, Mayo Clinic, IBM, Hormel Foods, Crenlo and others. He has worked in Rochester for the Post Bulletin since 1999. Readers can reach Jeff at 507-285-7798 or jkiger@postbulletin.com.
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