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Hillcrest Development has started demolishing parts of General Mills' former Cheerios flour factory in northeast Minneapolis to make way for a $16 million office complex.

Hillcrest bought the 107-year-old factory, which includes a nine-story tower, in 2019 for $2.1 million.

The structure, renamed the Highlight Tower, sits next to the former Minneapolis school board headquarters building Hillcrest bought in 2015 and redeveloped into offices now known as Highlight Center.

Together the two developments will form a commercial campus with 250,000 square feet in the middle of a bustling district known for art, craft breweries, coffee roasters, restaurants and the site of several future multihousing developments, said Hillcrest Managing Partner Scott Tankenoff.

Tankenoff credited the Logan Park Neighborhood Association for its work to move the project ahead. "This was one project where everyone was happy" with Hillcrest's desire to build speculative and creative office spaces for future tenants, he said.

Minneapolis City Council Member Kevin Reich, who grew up playing in Logan Park down the block from the plant and remembers the ever-present smell of cooked oats in his football jersey lobbied for Hillcrest to preserve the former General Mills' tower.

"It's a really cool building with a really cool past, and now it is being creatively repurposed," Reich said. "This was ground zero for all the world's supply of Cheerios [flour] and now it will ... capture some of that energy and redirect it."

While the pandemic prompted other developers to halt speculative office construction, Tankenoff said he was never put off by the downturn because northeast Minneapolis is stable and remains vibrant.

"I have no concerns about finding the right clients. Part of it is putting the right tenants in. We are looking for the right fit," he said.

This week, Hillcrest is knocking down the rest of five small silos and several one- and two-story structures attached to the tower that for decades carried the General Mills sign.

The site, at 1201 Jackson St., will retain the existing tower, six large silos plus three other connected buildings of varying heights. Demolition and construction should take about 6 1/2 months.

In the end, Hillcrest will offer leases ranging from 1,000 square feet to perhaps 30,000 to 40,000 square feet. GE's old tower has very high ceilings, so Hillcrest can create up to 90,000 usable square feet simply by adding new floors or mezzanine levels, officials said.

Hillcrest expects the tower to attract office and IT tenants, a coffee shop, a restaurant or two and possibly a company specializing in some form of indoor recreation. Hillcrest has not yet selected a general contractor but again tapped Tanek Architects, which also re-designed the school board building into Highlight Center.

Any tenants headed into the renovated tower are expected to complement those in Highland Center, Tankenoff said.

The center now houses Able Brewery and Minnesota Nice Cream, SportsEngine, the OneOme testing lab, Kellington Construction, Reve Consulting and 18 other businesses.