As more workers return to their downtown offices, AT&T employees are moving out of their namesake tower in Minneapolis.
The carrier said it is moving all operations currently taking place in the 34-story building at 901 Marquette Av. , to a facility about 10 miles south in Bloomington.
“This move will be completed by the end of August, allowing us to use our office space more effectively,” said Clay Owen, the company’s director of public relations. “It is important to note that these jobs will remain in the greater Minneapolis area, and we will remain committed to the state of Minnesota.”
Owen declined to say how many people the move would affect. The decision will affect at least 260 workers in the building, mostly teleconference professionals and group workers who have worked there since 1992 and returned to their offices late last year, Shari Wojtowicz, president of the Communications Workers of America Council of Minnesota, said.
She said that number does not include managers, sales staff and other non-union workers, including many who may remain remote or come to the office periodically.
The Twin City-based Ryan Companies built the tower and now operate it. As AT&T prepares to move later this year, discussions about a new name for the tower have just begun, Jami Clausen, general manager of the tower at Ryan, said.
“The AT&T Tower is a landmark in the Minneapolis skyline, and we look forward to starting a new chapter,” said Clausen. “AT&T has been a high-value tenant, and we wish them the best.”
news that I mentioned Axios for the first time, comes as many other workers slowly return to downtown. Office vacancy rates have remained consistently high in the region since the start of the pandemic.
AT&T has been an anchor tenant in the building since its construction in 1991. The tower—clad in glass that mirrors its neighbours, including the Foshay Tower—has a distinct presence on the skyline because the tower’s crown appears to unfurl like a blossoming rose.
Over the years, the company has slowly reduced its space inside the building and now occupies only about 95,000 square feet on five lower floors, according to commercial realtors Cushman & Wakefield.
“This is an understandable decision,” said Tom Tracy, executive director at Cushman & Wakefield. “Just like everyone else, they do more with less and pool their efforts.”
While downtown leasing velocity remains light, major tenants, including law firms and financial services firms, are doubling down on their commitment to downtown, Tracy said.
“While they may be of the right size or move to different places because of the way they do business, they generally say, ‘We’re going to stay downtown.'”
More than 80% of the AT&T Tower is leased, according to Ryan Companies, but the vacancy rate in downtown Minneapolis’ central business district during the first quarter of 2023 was 24.3%. That’s just behind the South/Airport sub-market and 3 percentage points higher than the metro area, according to new data from Cushman and Wakefield. For each company, the vacancy rate in the central business district was 30% when including vacant space available for subletting.
Last year, the company said new leases accounted for nearly 890,000 square feet of office space in the central business district in downtown Minneapolis, up 19% from a year earlier. Class A space like the AT&T tower accounted for 54% of all rental activity last year, a significant increase from the previous year.
“The best buildings outshine all others,” Tracy said, noting that landlords attract potential tenants with high-quality spaces and amenities intended to entice workers to return to the office.
Tracy and his colleagues recently rented nearly 45,000 square feet of office space in The 15 Building, a downtown Minneapolis landmark famous for its colorful mural of Bob Dylan. When leasing began in February 2020, the 12-story, 130,000-square-foot building was 70% leased.
Despite similar gains for downtown property owners, AT&T’s decision didn’t come as a surprise to insiders.
“It’s been in the works for a few months,” said Steve Kramer, CEO of the Minneapolis Downtown City Council.
Cramer said he sees the move more as another case of a company adjusting its real estate portfolio in the changing office market than a rejection of downtown.
“It’s not great news, but I can understand it,” Cramer said. “It’s much more about, ‘This is the most economical and efficient real estate decision for our company.'”
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