Downtown Minneapolis Office Market

[Viktor Vaughn]

The Star Tribune's Jennifer Bjorhus asks a question that's been on my mind.

What will Wells Fargo towers do to the downtown real estate market?

As trans­form­a­tive as a $400 million development pro­ject will be for one side of down­town, it threat­ens to leave an­oth­er side with some gap­ing holes should Wells Fargo choose to pick up and leave some of its down­town of­fices.

It’s space that won’t eas­i­ly be filled giv­en cur­rent of­fice mar­ket dy­nam­ics, and the company’s effort to consolidate workers will cast its own eco­nom­ic rip­ples, said Brent Erickson, seni­or di­rec­tor at Cushman & Wake­field/NorthMarq.

In the Twin Cities, the bank’s huge workforce is spread across at least 16 lo­ca­tions from Eden Prairie to Eagan to Shoreview. About 7,000 of the more than 20,000 employees Wells Fargo has in Minnesota work in downtown Minneapolis, in 14 buildings.

The bank has said it plans to stay put in its local head­quar­ters down­town in the tall, gold­en Wells Fargo Center next to the IDS Center. Ev­er­y­thing else ap­pears to be up for grabs.

...Those include the Northstar Center, where it leas­es about 520,000 square feet, and the Baker Center, where it leas­es about 450,000 square feet. Both build­ings are old, but the cheap Class B of­fice space could play in fa­vor of the bank stay­ing.

...A few sug­gest­ed that the build­ings might be best re­devel­oped for another use al­to­geth­er, such as apart­ments, or perhaps even torn down.

[Chauncey87]

At the end of the article it talked about the idea of moving employees from Charlotte NC to Minneapolis. I wonder how much truth is behind this idea.

[Tcmetro]

Perhaps we could see some more office-to-apartment conversions. I think the Rand Tower would be a really cool apartment building, next to Soo Line and all. Maybe even the Medical Arts, Young Quinlan, Lumber Exchange, Butler Square or even the Qwest building could be turned to apartments.

The Qwest building would be the coolest place to live. [/dreams]

[Didier]

I get that this is a real question, but sometimes portraying a huge new investment into the city as a new problem feels kind of annoying.

[FISHMANPET]

I'm guessing an office to apartment conversion costs quite a bit less than building a new apartment building of equivalent size, which is good for the apartment market at least.

[Viktor Vaughn]

I get that this is a real question, but sometimes portraying a huge new investment into the city as a new problem feels kind of annoying.

I'm sure the reporter is sorry to kind of annoy you with her real question, but to me it feels kind of annoying to repeatedly hear "6,000 jobs in downtown minneapolis!" without anyone paying attention to the other side of the equation - where those jobs will be moved from. This project looks nice and all, but you can't really evaluate it without seeing what it will do to the office market and other projects in the works.

[Silophant]

Yeah, but according to the Strib articles, at least, WF was previously looking to build a large campus out in the suburbs. So if they would have been leaving their other downtown locations anyway, its better that they stay downtown, at least.

[Didier]

So you'd rather Wells Fargo scrap the plan and we stick with what we have? The portrayal of this problem as something negative is looking for negativity.

[Didier]

It's like the guy who wins the lottery and complains about the taxes.

[Viktor Vaughn]

No. I'm just saying the project should be evaluated based on the whole picture. To claim negativity for looking beyond headline stats seems like blind boosterism.

[talindsay]

Was just in the Baker Center and it's an attractive building in the public spaces - certainly no evidence of it being in bad shape. Of course the class B office parts may well be different. Seems like a very good candidate for some new mix of uses, as long as they don't take away the BofA ATM (one of only two in the entire metro).

[Didier]

I am claiming negativity because literally all new development affects the existing supply.

[Nick]

If this ends up being merely a transfer of existing employees downtown, then that's not necessarily 100% great for downtown. It's far from the apocalypse but it's worth writing about in the business section of the paper.

[go4guy]

Hopefully they bring in some of the employees from the suburbs and the Phillips neighborhood. And like many have said, if they leave older buildings in downtown, that is a perfect opportunity to redevelop those into apartments/condos.

[Rich]

Wouldn't the increased supply of office space put downward pressure on downtown rents? If so it could help lure business who’d otherwise consider the suburbs.

[mplsjaromir]

I think it's safe to say there will not be a major office tower built anytime soon. Not that anyone was clamoring to do so anyway.

[Anondson]

Downward rents would likely undercut any incentive to build office space downtown.

[Rich]

True. But maybe downward rents will help fill the offices that Wells Fargo vacates in order to transfer folks to their new towers.

[Minneboy]

...and let's not forget that if someone would want to consolidate in a larger space the space WF is vacating wouldn't suffice.

[min-chi-cbus]

I get that this is a real question, but sometimes portraying a huge new investment into the city as a new problem feels kind of annoying.

I'm sure the reporter is sorry to kind of annoy you with her real question, but to me it feels kind of annoying to repeatedly hear "6,000 jobs in downtown minneapolis!" without anyone paying attention to the other side of the equation - where those jobs will be moved from. This project looks nice and all, but you can't really evaluate it without seeing what it will do to the office market and other projects in the works.

Both good points: you shouldn't focus on the negatives in what should be a positive development in the city, but at the same time let's not get caught up in all of the headlines that are usually driven to show only the positives and not the flip side.

It's the natural progression of a business the size of Wells Fargo, which grows and expands into multiple different spaces, then collapses again into a few much larger spaces. And so on and so forth...