Three years ago, Brian Forcier announced the construction of Duluth’s largest commercial office building. As president of AtWater Group, he stood side-by-side with then-Mayor Don Ness and outlined details of the $80-plus million project at 425 W. Superior St.
Today, as president of Titanium Properties LLC, he’s independently acquiring and redeveloping Downtown Duluth commercial properties. Although the investment amounts are smaller, he continues to tackle significant challenges.
Last summer, he closed on the purchase of a four-level structure at 120 E. Superior St. While that information alone might not raise eyebrows, the building’s history provides context. It formerly was occupied by the Last Place on Earth and had been owned by controversial retailer Jim Carlson, who was convicted of selling illegal synthetic drugs there and received a 17-year prison sentence.
Before 2015 closed, Titanium Properties also purchased the Voyageur Lakewalk Inn at 333 E. Superior St. The property has a prime location, but Forcier was not happy with its cash clientele, and he noted the reservation system and payment options both needed improvement, along with some other things.
He wasn’t deterred by those challenges.
“There’s a lot of real estate activity in Duluth right now. A lot of major players from the Twin Cities are looking. I think there will be more investment than ever,” said Forcier, who is a Certified Commercial Investment Member and a licensed real estate broker in Minnesota and Wisconsin. He’s particularly optimistic about East Superior Street, dubbed the Historic Arts & Theater District, where he anticipates additional development will occur. “It’s really a strong market right now on this end of town,” he said.
Location, location, location
From the deck of the Voyageur Lakewalk Inn, there’s an unobstructed view of Lake Superior. It’s a popular gathering spot for out-of-town guests.
On the weekend of Grandma’s Marathon, Forcier added a gas grill to the overlook.
“It was just packed. People were lined up all the way down the stairs,” he said.
The activity was a great sight. Titanium purchased the lodging property last Dec. 1, a slow time on Duluth’s lodging calendar.
“Winter in Duluth with an exterior motel is tough,” Forcier said, referring to its rooms, which exit directly into the elements instead of a heated hallway, and other factors. “We debated what we should do to change the course.”
Working with Duluth Police to get tough on troublesome customers was one decision made early.
“The word spread that we weren’t willing to put up with shenanigans. We also required a credit card at check-in. That has helped a lot,” Forcier said.
Audra Elikeza, experienced in the lodging business, was hired as manager.
“Audra brought in tremendous new management,” he said. To enhance revenue, they added an online reservation system. It was an important addition, particularly because the property was not part of a franchise and did not receive booking assistance.
“We immediately saw an increase in business. Since we did that, our occupancy skyrocketed, and our daily rates went up,” Forcier said. The Voyageur has been 100 percent full every night since June 1, he noted, and the clientele has changed.
“Last Friday,” he said in early August, “we had three BMWs in the parking lot with expensive bikes on the back. They were young people from the Twin Cities. That’s the group I really want to attract here.”
Undeniably, the purchase was a gamble. The Voyageur isn’t the only kid on the block. It is surrounded by the Sheraton on the west and Fitger’s on the east. But Forcier went into the deal with a positive attitude and decades of property experience.
“During summer, can offer a great location at substantially less than at Fitgers or the Sheraton. I also saw the real estate piece of it. I really like the location,” he said, which includes its close proximity to the Essentia Health Duluth Clinic plus on-site parking and adjacent parking in the city’s First Street ramp (76 spaces for 41 rooms). “This is probably one of the better real estate moves I’ve made, and (lodging) is a fun business.”
An infrastructure challenge
Titanium Properties paid $70,000 for the 120 E. Superior St. building - a steal by most measures – even for a 108-year-old building. That sum, however, doubled when legal costs were factored in. Former owner Carlson repeatedly went to court in a losing battle to prevent the sale of his property, which had been confiscated by the U.S. Marshal’s Service as part of their criminal case.
Those numbers, however, are small change. About $1.5 million is being invested to rehabilitate the building. The southwest corner of the foundation had to be fortified, as did floor joists. Structural steel was added through the length of the building. Sprinklers were added. Sanitary hookups were replaced, new trench drains were installed, as were new water pipes to Superior Street.
Tenant commitments made the investment possible. The largest amount of space will be leased by Blacklist Artisan Ales, a four-year old brewing company founded with a Kickstarter campaign by Brian Schanzebach and Jon Loss. It will occupy 6,000 square feet, brewing on the Michigan Street level and operating a Superior Street-level taproom.
“Obviously the building has a bit of a checkered history, but doing something different seemed like a good idea,” said Blacklist General Council and partner T.J. Estabrook, who Forcier introduced to Schanzebach and Loss last year. “We felt it would be a good attraction. There already are brewpubs, but we’re putting a production brewery right downtown.”
Production, about 250 barrels this year, is expected to reach 1,000 barrels during Blacklist’s first year in the 120 E. building. Capacity there is 2,000 barrels.
“I love craft beer and see something really special in what we’re doing,” Estabrook said.
Blacklist will offer bar snacks but will not be a restaurant. The owners prefer not to compete with existing eateries. A unique aspect of their serving area is an indoor/outdoor space. During warm weather, a 10x12-foot garage door will open to Superior Street. It will be closed during inclement weather.
A second large tenant is Solve Entertainment, which currently operates at 408 W. Superior St. Solve, owned by Richard Hansen and Matthew Wagner, provides hour-long escape game experiences for adults and older children, requiring them to use creative thinking and work in groups to solve a story-based mystery. Like Estabrook, Hansen learned about the 120E building through a personal connection with Forcier.
“We were looking for a place when we applied for the Greater Downtown Council’s pop-up storefront program,” Hansen said. Forcier was on the panel that selected applicants. The holiday concept proved popular and Solve Entertainment signed a lease with Oneida Realty to remain until May 2017. Months later, Solve needed even more space than the 1,500 square feet they were leasing, so the start-up company worked out a deal to expand into the 2,600-square-foot second floor at 120E. Doors are expected to open there on Nov. 1. Through May, Solve will operate at both locations. If demand continues, that arrangement might continue.
“At first, we had no idea how an escape room would be received. We discovered people loved the thing,” Hansen said. The concept has not only been popular with individuals and their friends, but also as a corporate team-building adventure, he added.
To keep the concept from growing old with customers, room designs and concepts are changed about every four months. Andy Bennett helps create the puzzle concepts.
Hansen doesn’t believe the building’s reputation is an obstacle. For their business, he said it will add to the mystery.
“Our goal for 120E Building is to make this a place our whole community can be proud of once again,” Forcier said at a July press conference. “The building was in rough shape, but the core structure is solid, and we’re making a significant investment to bring it back to its proper glory. Our company decided to take the risk to do what we consider to be the right thing.”