Some fearful others will follow Target in exiting downtown
MINNEAPOLIS (AP) — Twin Cities commercial real estate managers are fearful Target Corp.’s decision to leave its downtown 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. Target’s lease expires in 2031.
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 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 (C & W) national survey revealed that 81% of employers across 35 markets expect to switch to a work-from-home model post-COVID-19.
According to C & W, about 22% of Minneapolis’ core business district’s 28.4 million square feet of office space is vacant.