Colliers to sell former state hospital for the mentally ill in Minnesota

October 31, 2012  |  Dan Rafter  |  Print Article  |  Email this Article

Fergus Falls State Hospital

Dan Peterson, a commercial broker with the Minneapolis-St. Paul office of Colliers International, has sold plenty of properties during his career. The Fergus Falls State Hospital, though, might rank as the most unusual.

The hospital, more than 100 years old, once served as a treatment center for the mentally ill in the remote community of Fergus Falls, Minn., a city that sits about 50 miles from Fargo, N.D., and 150 miles from Minneapolis.

The 500,000-square-foot facility features stunning architecture and covers 34 acres of land. Viewed from the air, it more closely resembles a Medieval castle than it does a hospital.

Because of its size and its location, the property requires a certain kind of user: One whom Peterson says is interested in transforming the former hospital into a destination.

“To take on this property, any developer or user would have to commit to a scale of redevelopment that is significant,” Peterson said. “It would be about creating a destination.”

Peterson says that he can envision the day when the hospital becomes a veterans’ facility, business school, educational campus or health research or treatment facility.

So far, several potential users have expressed interest in the facility. And the price is certainly right; the asking price of the entire facility is $1. Buyers, though, must pledge to invest at least $5 million into the property after purchasing it. Buyers can take advantage of state funds to help them with demolition or rehabilitation.

Interest, though, doesn’t always translate into sales.

“There is a lot of enthusiasm on the part of potential buyers once they see hte setting, the scale and the architecture. It’s when buyers really drill down into the tangible aspects of how to make a creative vision a real thing there that some of that enthusiasm gets tempered a bit. The business we are in is about connecting that vision to commercial value. Part of our job is to work through that enthusiasm to see if the true metrics of tangible development are there.”

Peterson said that buyers interested in using just part of the facility are also welcome to make proposals. The city of Fergus Falls is interested in working with all potential buyers to make sure that the property does not sit empty.

For Peterson, the challenge lies in properly selling the many benefits for the right developer of this property.

“Any time you are marketing a project such as this, you have to demonstrate a future that doesn’t yet exist,” Peterson said. “We have to tellt he story of this facility, this land and Fergus Falls itself. Whoever buys this property has the opportunity to create a true destination in this portion of western Minnesota. That takes a bit of storytelling. We try to tell that story.”

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