Sherman Associates Closes on $136.5 Million Mixed-Income Development in Downtown Rochester

Sherman Associates has closed on financing for a $136.5 million mixed-income multifamily development at 217 East Center Street in downtown Rochester, Minnesota, the developer announced Aug. 26. The project, situated on the former Civic Center North surface parking lot along the Zumbro River, will deliver 349 new homes across two buildings and marks Sherman Associates' entry into the Rochester market.

Project Overview: Two Buildings, 349 Units

The development at the Civic Center North Lot — an approximately 1.77-acre, city-owned parcel north of Mayo Civic Center — comprises a 273-unit market-rate residential tower and a 76-unit affordable senior housing building. The two structures will share a 350-stall enclosed parking garage.

The market-rate tower will include 221 traditional apartment homes and 52 fully furnished short-term and month-to-month residences. The flexible units are designed to serve healthcare professionals, visiting medical staff, patient families, and others seeking temporary housing near Mayo Clinic and downtown Rochester. The affordable senior building will provide age-restricted homes for older adults.

"Rochester continues to experience tremendous growth, creating a need for more housing options that support the people who work, receive care, and live in the community," said Chris Sherman, President of Sherman Associates. "By bringing together a variety of housing options in the downtown core, we're helping create a more connected, vibrant neighborhood that supports Rochester's growth and long-term economic vitality."

The site is within the Destination Medical Center district, a long-term public-private initiative anchored by Mayo Clinic. The project is the product of a public-private partnership among Sherman Associates, the City of Rochester, and the Destination Medical Center (DMC).

Public Incentives and Capital Structure

The $136.5 million development is supported by a performance-based tax increment financing (TIF) structure that covers both the market-rate and affordable phases, enabling them to advance simultaneously. The City of Rochester and the DMC Corporation authorized up to $13.5 million in TIF for the combined project, along with a $500,000 DMC investment directed toward riverfront and public realm improvements adjacent to the site.

The City of Rochester issued a request for proposals for the Civic Center North Lot in 2021. Sherman Associates was selected as developer in 2022, followed by an exclusive negotiating rights agreement. The city's former surface parking lot on the site was scheduled to close permanently in connection with site preparation for the development.

Rochester Mayor Kim Norton said the project advances the city's housing goals. "By bringing both market-rate apartments and affordable senior housing to the heart of downtown, this development will provide more housing options while creating new opportunities for people to live, work and stay connected to our community," Norton said. "We are pleased to see this important site moving forward through a strong public-private partnership."

DMC Executive Director Patrick Seeb also commented on the closing. "A strong downtown is not simply a place people visit. It is a place people can call home," Seeb said. "Sherman Associates' investment will bring hundreds of new residents to the heart of downtown, create more housing choices across ages and incomes, and reconnect an important downtown site to the Zumbro River."

Sustainability, Transit, and Public Amenities

The market-rate tower is pursuing National Green Building Standard (NGBS) Silver certification, while the affordable senior housing building is pursuing both Enterprise Green Communities and ENERGY STAR Multifamily New Construction certifications. Both buildings are designed with ENERGY STAR appliances, solar-ready infrastructure, and high-performance building systems meeting Minnesota Sustainable Building 2030 (SB2030) standards.

The development is located near the Link Bus Rapid Transit station at the Civic Center and provides access to Rochester's riverfront trail system and pedestrian skyway network. The project will also include a new publicly accessible riverfront walking path along the Zumbro River, which borders the site to the east.

Frana Companies is serving as general contractor and ESG Architecture & Design as architect. Construction is underway, with both buildings expected to open in spring 2028.

Sherman Associates' Portfolio and Rochester Market Context

Sherman Associates develops, owns, and operates assets across the Midwest, Colorado, and Florida. The company has developed more than 13,000 multifamily units and currently owns and manages over 7,400 rental units, including both affordable and market-rate housing. Its commercial holdings include more than one million square feet of space, five hotels, four Starbucks stores, three restaurants, and two solar gardens.

The Rochester project represents the firm's first development in the Rochester market. The program evolved through several iterations from the original RFP response — early concepts called for approximately 246 market-rate and 84 affordable units — before reaching the final 349-unit configuration at financial close. The total development cost of $136.5 million falls within the $127 million to $140 million range referenced in earlier public documents as the project moved from concept through final underwriting.

Sources

Sherman Associates — Project Announcement (Aug. 26, 2026)