CSM will expand event space at historic Depot

CSM Corp. will close a popular ice rink at its Depot hotel and event center complex in downtown Minneapolis to expand its banquet space.

CSM Corp. will close the Depot ice rink next month as it prepares to permanently convert it into a special events and banquet space. (Staff photo: Bill Klotz)

CSM Corp. will close the Depot ice rink next month as it prepares to permanently convert it into a special events and banquet space. (Staff photo: Bill Klotz)

The Minneapolis-based developer received approval on Tuesday from the Minneapolis Heritage Preservation Commission for a $7 million renovation of its historic Milwaukee Road Depot complex at 225 Third Ave. S. The building’s local and national designation as a historic property triggered the review.

The Depot will gain 24,000 square feet of banquet space on what is now a surface parking lot covered by the historic train shed on the east portion of the site. CSM will also transform the indoor ice rink into a permanent event space, which will allow it to host two major events at once and cater to growing demand, said Steve Schlundt, CSM’s president for lodging and residential. After the renovation is done, the complex will have a total of 90,000 square feet of event space.

The renovation project comes at a time when at least five new hotels – totaling 825 rooms – are in various stages of development along the Washington Avenue corridor of downtown Minneapolis, according to Finance & Commerce’s online Hotel Development and Sales Tracker. The Depot sits on the north side of Washington Avenue, between Fifth and Third avenues.

But the new competitors are considered limited service hotels, opening an opportunity for CSM to further differentiate the complex from the pack, said Steve Sherf, president of the Excelsior-based Hospitality Consulting Group.    

“You can never have too much meeting or event space,” Sherf said. “Most of the new hotels that are coming online downtown don’t have large meeting spaces.”

While the developer won’t begin the project until the 2018 Super Bowl has come and gone, it will close the Depot Ice Rink for good next month. CSM plans a fall 2018 completion date of the event center renovation.

“We’re pleased there is strong demand for lodging in Minneapolis and specifically, growing demand for our historically unique event space,” Schlundt said in an email. “That’s a niche we’d like to expand on while preserving the past of this incredible landmark and being responsive to community needs.”

The Depot already has 66,000 square feet of event space throughout the complex, which includes the attached 335-room Renaissance Minneapolis Hotel and the 131-room Residence Inn. Last year, CSM completed a $12 million, 110-room expansion of the Renaissance Minneapolis Hotel.

The additional event space will also allow the Depot’s hotels to better compete with other full-service hotels in downtown Minneapolis, said Jon Ruzicka, a senior associate specializing in hotels for the Minneapolis office of Marcus & Millichap.

“Adding onto that already existing banquet space will directly correlate to getting more people to stay at that hotel,” Ruzicka said. “And there’s good money in food and beverage that comes along with booking more and larger events. It’s a demand generator.”

While event space demand is the main driver for the expansion, a recent federal Environmental Protection Agency regulation phased out the refrigerant used to keep the ice rink cold. The developer determined that an upgrade to the cooling unit would be too “cost-prohibitive” to keep the rink open, CSM said in a prepared statement released Wednesday.

CSM redeveloped the historic Milwaukee Road Depot in 1999. In 2001 it opened the two hotels, ice rink and event space at the site.

Last fall, a 164-room Radisson Red opened four blocks southeast of The Depot at 609 Third St., and the 126-room Hewing Hotel opened six blocks to the west at 300 Washington Ave. N.

Three hotels are proposed just a few blocks from The Depot:

    235-room Hyatt Centric at 800 Washington Ave. S.
    150-room Canopy by Hilton at 708 Third St. S.
    150-room Moxy Hotel at southeast corner of Washington and Chicago avenues.

Reported by:  Finance-commerce.com