Twin Cities commercial real estate managers are fearful Target Corp.’s decision to partly leave its downtown Minneapolis location will become a trend that will continue to diminish office space needs.
Target informed the City Center’s manager Thursday that it will no longer need the 985,000 square feet of office space it rents in the 51-story tower because it is permanently moving to a hybrid remote work model for 3,500 employees. Its lease in the City Center expires in 2031.
With 8,500 employees overall, Target is downtown Minneapolis’ largest employer.
The City Center houses one-third of Target’s downtown staff. The retailer houses the rest at its headquarters complex on Nicollet Mall. It also has an office complex in Brooklyn Park.
The COVID-19 coronavirus pandemic has darkened many buildings in the downtown business district as employees adjust to working at home to avoid contracting the virus.
Building managers are bracing for additional fallout from the big retailer’s decision to partially vacate downtown, the Star Tribune reported.
“This could become a signaling event to other companies. That if Target is doing this, then maybe we should think about this, too. That’s probably causing heartburn to property managers and owners downtown,” said Jim Vos, principal of the Cresa commercial real estate services firm that advises hundreds of office and industrial tenants in the Minneapolis area.
A recent Cushman & Wakefield national survey revealed that 81 percent of employers across 35 markets expect to switch to a work-from-home model post-COVID-19.
According to C&W, about 22 percent of Minneapolis’ core business district’s 28.4 million square feet of office space is vacant.