In his 2025 State of the City address Off Site Link, now-former St. Paul Mayor Melvin Carter shared his administration’s efforts to attract as many as 20,000 residents to live downtown. Part of that plan involved transforming old office buildings into high-rise apartments and condos.
“By converting vacant offices into homes, we can meet demand, grow our population, and bring new life to downtown,” he told the audience.
One of the buildings is now on the verge of welcoming its first tenants. Located at the corner of 6th St. E and Wabasha St. N., The Stella is expected to open in spring 2026. It took years of starts and stops, along with a revolving cast of developers to get the old Ecolab University office tower to where it is today – ready to deliver on a key promise and bring more people to live in downtown St. Paul.
A “Shell of a Building”
Developers had long had their eye on the former Ecolab headquarters as a potential high-rise apartment complex. In 2019, a Chicago-based real estate developer purchased the building Off Site Link with plans to add 200 units and a grocery store on the first level. Those plans never materialized, despite crews demolishing several floors inside the building.
Eventually, the property came to the attention of Carl Kaeding, co-founder and principal of Kaeding Development Group Off Site Link. The Bloomington firm specializes in multi-family housing projects, but nearly all of them are new construction. The Stella is Kaeding’s first inside a former office complex.
“It wasn’t an office building anymore, but it wasn’t yet an apartment building,” says Kaeding. “It really wasn’t anything anymore — it was just a shell of a building.”
Kaeding says his team, along with an affiliate of Illinois-based The Inland Real Estate Group of Companies, Inc., purchased the 16-story tower out of foreclosure. They started laying out new plans almost immediately.
Ultimately, the new plans call for just over 170 units, with a mix of studio, and 1–3-bedroom units, plus a handful of penthouse residences. Other amenities include coworking space, fitness and yoga studios, a coffee lounge and rooftop deck.
Demand at the Right Time
The finishing touches on units at The Stella are coming just as St. Paul sees more demand for downtown living space.
Several businesses – including Travelers, Ecolab and Securian – have started to bring workers back to the office full-time following the COVID-19 pandemic. Kaeding says that is leading to more young and emerging business professionals wanting to live closer to their offices.
“They need to be able to afford a reasonably priced one-bedroom unit that’s walkable from all of the activities, work and connected to the skyway system,” he says.
In addition, St. Paul’s rent control ordinance, passed by voters in 2021, meant fewer new rental units have been built. While the city council has relaxed some of those restrictions in recent years, the supply has yet to catch up with the demand.
Solving Unusual Challenges
“When you redraw a whole new set of plans and then try to put them into an existing building, that’s a huge challenge,” says Kaeding.
That’s just one of the multiple challenges Kaeding and the teams faced along the way. But with every obstacle, they have learned something new for the future.
For starters, the actual building process is very different than when the Ecolab tower was built more than 50 years ago. Back then, crews built everything on site, level by level. Today, Kaeding says crews try to construct many parts offsite, then bring them onto the site.
That can lead to major headaches if measurements don’t line up exactly.
“You look at a big glass and steel tower and think everything must be perfectly square, plumb, upright and straight,” says Kaeding. “But then you go up a couple hundred feet, and everything is over by one inch. It seems insignificant, but it makes a big deal.”
The Money Side
Several different financing tools were pieced together for this project. Sunrise Banks provided the senior construction loan. The PACE Loan Group in Minneapolis came in with Commercial Property Assessed Clean Energy (C-PACE) lending to make the building more energy efficient and sustainable.
“To our knowledge, this was one of the first C-PACE loans in the country for an office-to-multifamily building conversion,” says Matthew McCormack, a senior vice president for PACE Loan Group. “It solidified the applicability for C-PACE in these complex transactions that bring new life to downtowns.”
The project also received state and federal historic tax credits due to the building’s status as a historic property. Bridgewater Bank provided a bridge loan to monetize the tax credits early in the process.
“With three lenders involved and the tax credits, this was an incredibly complex transaction,” says Paul Berg, a Vice President with Sunrise Banks.
Making matters more complex, The Stella is in an Opportunity Zone in St. Paul, which may provide federal tax breaks for reinvesting capital gains into new or existing businesses or real estate.
“We went through several renditions of the ownership structure and revamped our financing lineup until we were able to maximize the tax benefits for all the various investors,” explains Berg.
“Not for the Faint of Heart”
Kaeding says the idea of transforming old office or commercial buildings into livable housing sounds great, in theory. In reality, it’s much more complicated.
“Nearly every major city in the country is having this conversation about converting vacant office space into multi-family living space,” explains Kaeding. “Everyone is saying, ‘Wouldn’t this be great?’ And that’s usually where the conversation ends because it’s a really expensive proposition.”
Still, that expense and hassle can be worth it. Kaeding adds that the process is much better from an environmental perspective than demolishing an entire office tower. It also preserves the city’s skyline.
Overall, Kaeding says, it can work – if all the parties involved commit to getting it right. That not only includes developers and property managers, but also banking and lending partners, equity managers, and city officials.
“I’m a Saint Paul native,” said Berg. “I really wanted to be part of this project from the start. Now, as it nears completion, I can see that this will help fuel the city’s rebound.”
“It’s a labor of love,” says Kaeding. “It takes a lot of time, but it is certainly rewarding.”
More on The Stella
The Stella is expected to begin leasing units in February 2026 and open for tenants in April 2026. Visit www.stellastpaul.com Off Site Link for more information.
Amanda Theisen is the communications manager for Sunrise Banks.
Member FDIC / Equal Housing Lender
This article originally appeared in the MN Rising section of the Minnesota Star Tribune Off Site Link.