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A luxury apartment tower could replace a controversial 40-story condominium tower on a site across the Mississippi River from downtown Minneapolis.

Chicago-based CA Ventures wants to build a 27-story tower at 200 SE. Central Av. in the heart of the St. Anthony Falls Historic District in Minneapolis.

The city's Heritage Preservation Commission is scheduled to review the plan Feb. 4. It would replace Alia, a condo tower that had been proposed several years ago by Minneapolis-based Alatus. That project was delayed several times over city approvals and legal challenges by local residents over the height and density of the project.

Though Alatus won approval for the project, it pulled the plug on the condo project late last year, citing concerns about the ability of the market to absorb a flurry of $1 million-plus condos.

When Alatus initially proposed the 214-unit Alia tower, it was the only high-end condo project on the drawing board. While Alatus fought for permission to build the tower, a handful of other luxury condo projects were announced. Alatus' decision to scuttle the project coincided with an announcement that construction was about to begin on a competing 41-story tower just across the river with prices starting at just shy of $1 million.

When Alatus CEO Bob Lux made the decision to pull the plug on the condo tower, he said it was a prime site for a residential development and that he would make it available to other developers.

Alatus was unable to comment on the status of the site; there's no public record of a sale.

Plans submitted to the city show 356 apartments atop nearly 5,000 square feet of ground-level retail space. The new tower was designed by Minneapolis-based ESG Architects, which also designed the condo tower for Alatus. Renderings submitted to the city in advance of the Heritage Preservation Commission meeting show an apartment tower that, while shorter than the Alia condo tower, retains the same shape and style, and incorporates many of the same materials.

CA Ventures declined to comment on the project pending approvals. The Chicago-based firm, which plans to acquire the site through an affiliated entity called Clark Street Holdings, is one of the most active out-of-town developers in Minneapolis. It's an international company that in partnership with another firm is in the process of developing a high-rise rental building along Hennepin Avenue in downtown Minneapolis and an ambitious rental project near the University of Minnesota that's aimed at students.

With apartments, CA Ventures will face its own competition. Demand for rentals in the neighborhoods across the river from downtown Minneapolis has until recently been particularly robust, but over the past couple years several hundred new units have been built and hundreds more are under construction, including the Expo, a luxury apartment tower on the next block that's nearing completion.

Mary Bujold, president of Maxfield Research, said that given the timing of so many new units coming into the market in that area there's been an increase in concessions or inducements to rent.

"The market is already softening, and it will soften further," she said. "While the neighborhood is very attractive and the location is great, we are already seeing concessions over there and plenty of renters hopping from one new building to the next to get deals."

Bujold said that while renters have plenty of choices right now, national developers are vigorously pursuing prime development sites such as the one at 200 Central SE. She said because the rental market in the Twin Cities is still one of the strongest in the nation, those firms are willing to tolerate slightly more risk than they might in other markets.

The average vacancy rate across the metro is still well below 5%, which is considered balanced.