Everybody that follows urban development here in Minneapolis wants our first thousand-foot office tower. Depending on one’s mood and general economic sentiment, people say that we’re either closer than ever to that possibility, or that it won’t ever happen in this city. I disagree with that, as the desirability of Nicollet Mall, the sudden reduction in open surface lots downtown (thanks to the ongoing apartment boom) and positive economic growth all bode well for a new tower. A thousand footer may be a stretch, but I think the time is approaching for somebody to make a move to build something big. Wells Fargo’s rumored build near the new Vikings stadium could open up a lot of space in the core, setting this goal back, but I think we’ll have an announcement within two years of a new building of significant height.
Diving deeper into this topic than any other local media outlet, Finance & Commerce recently did an excellent piece on the rapid disappearance of Class A office space downtown. Here’s an excerpt:
Nicollet Mall is the “Main and Main” of downtown Minneapolis, and Class A buildings located along the avenue, particularly upper floor offices, are in high demand. Tenants are drawn as much to the central location of these buildings as they are to the image and perks of locating in newer Class A buildings that offer amenities ranging from polished marble floors to live music in the IDS Center’s Crystal Court
The “Target effect” is another key driver in the demand for space along this prime avenue. Vendors not only want to locate near their client’s headquarters at the south end of Nicollet Mall, but Target also requires some of its vendors locate nearby so they are more accessible to meetings with purchasing agents and other personnel.
Target itself is continuing to consume more space in the coveted area. The company has expanded its presence at the former Retek on the Mall building. Earlier this spring, the company agreed to lease 100 percent of the office space in the building or 449,233 rentable square feet. “That has made the Class A market on or near Nicollet Mall very tight,” says Salmen.
Overall, the Class A vacancy rate in the Minneapolis central business district represents the lowest in the metro at 11.5 percent. Several buildings along Nicollet Mall, such as US Bancorp Center, Wells Fargo Center and IDS Center are reporting vacancies (excluding sublease space) at less than 10 percent.”