Unlikely neighbors add to Osborn370′s entrepreneurial energy
Caroline Karanja and Bill Emory lead different outfits in a born-again skyscraper in downtown St. Paul.
Karanja, 29, an e-commerce veteran, is the co-founder of two-year-old 26 Letters, which works with a small, growing group of companies on integrating diversity, inclusion and equity into their business.
Karanja’s business is housed at Lunar Startups, one of a slew of tiny businesses in the Glen Nelson Center at American Public Media, a business accelerator that she joined in September located in the revamped former Ecolab headquarters, renamed Osborn370.
She pays $100 a month and gets access at economical rates to mentors, designers, publicists, legal, accounting and other services.
“We have clients and we’re building revenue,” said Karanja, a Kenyan immigrant, software architect and designer who graduated from Macalester College. “It feels like things are accelerating. I have a business partner and we bring in contractors as needed. I think we are just hitting the stage where we can think about signing a lease on some office space.
“And the money we save as part of Lunar Startups … allows us to invest and gives us more runway.”
Emory, 54, a veteran corporate manager turned independent business CEO, leads Smart Care Equipment Solutions, a nationwide firm of nearly $200 million in revenue that maintains and replaces appliances in commercial kitchens.
Smart Care, with 100 headquarters employees, is the single largest tenant at Osborn370.
“Our future is based on innovation and growth and we wanted to be here because of the vision that was laid out for us,” Emory said.
“We also wanted to be an employer of choice,” added Emory, whose company was spun out of Ecolab last year. “In March, we had no IT employees. We now have 13 full-time people and a slew of consultants. We also have recruited younger, ambitious talent.”
Emory and Karanja see each other at the bright, open community center on the fourth floor where workers relax, collaborate and socialize with other tenants.
Osborn370 is two-thirds leased and will generate positive cash flow when it hits the 80 percent range.
“I view this as a one-time investment in the city,” said Scott Burns, one of the owners, a tenant and veteran downtown software company owner. “I would give us an ‘A’ on our tenant mix. And 2019 will be the year to fill it up.”
Burns was the founder and an owner of St. Paul-based GovDelivery, which he sold in 2016 to a larger consolidator after 15 years. And he is an owner of Structural, a software firm that also is an Osborn tenant.
Burns, developer Rich Pakonen, fellow developer Tanya Bell and others paid a lowball $3.6 million to an out-of-town owner for the 20-story, 280,000-square-foot office tower in a deal shepherded by then-Mayor Chris Coleman and Ecolab Chief Executive Doug Baker. Ecolab, one of downtown St. Paul’s largest corporations was consolidating and moving its headquarters into the nearby 17-story tower that was vacated by Travelers Cos.
“We went to the [building] owners and said it’s not worth anything once we leave and we can help you steer it in a way that’s beneficial to St. Paul,” Baker told me last year. “We had higher offers … but we wanted this in the right hands.”
The building, which was valued for tax purposes at $11.4 million, had been occupied by Ecolab since 1968.
The new owners are financing the overhaul to tenant tastes with what will be about $20 million in debt by the time the facility is fully leased. They expect to be 90 percent full by next year.
Osborn370 is working so far. And downtown, thanks partly to Grade B office and warehouse space that has been converted to housing, art galleries, restaurants and otherwise, is boasting its highest occupancy rate since the Great Recession. And the most vitality in 50 years.
In addition to losing some businesses to suburbs, such as the former West Publishing’s move to Eagan, St. Paul lost St. Paul Cos. to takeover by New York-based Travelers Cos., and Cray Inc. to Bloomington. The big legal, accounting and other professional services consolidated in downtown Minneapolis years ago.
Osborn370 is the tip of St. Paul’s plans to prosper downtown through small business growth.
This is not cheap space at Osborn370. Bell said the square-footage leases, including dollars allocated for tenant improvements, are comparable to the nearby Class A buildings such as Wells Fargo and Lawson centers.
“We’ve taken down the majority of that $20 million [credit line] and we’re 90 percent done with building improvements,” Bell said.
Burns said the owners plan to hold the property for the long-term.
“I view this like a software company,” Burns said. “I got involved to own and run [Osborn]. We’re doing what we planned. I worried at first about whether we could finance [the project]. Now, I worry about the economy.”
Neal St. Anthony has been a Star Tribune business columnist and reporter since 1984. He can be contacted at firstname.lastname@example.org.