Oppenheimer Plans Move in Tenant-Friendly Market
After almost 25 years in the same building, Minneapolis-based law firm Oppenheimer Wolff & Donnelly, LLP, plans to move to the Campbell Mithun Tower-marking one of the largest downtown lease transactions in 2010 and illustrating the leverage that tenants are enjoying in the Twin Cities' high-vacancy, low-rent market.
Oppenheimer signed its new, 11-year lease earlier this week, according to Chris Rohrer, executive vice president at Jones Lang LaSalle, Inc., which represented the firm in the deal. The lease is for floors 16 through 20 in the new building, located at 222 South Ninth Street.
Oppenheimer will occupy about 100,000 square feet of space-roughly the same amount that it now leases at Plaza VII, a building located at 45 South Seventh Street that's owned by Carlson Real Estate Company. But Oppenheimer Chairman Tom Letscher said in a Thursday interview that the new lease deal represents a “very attractive” offer with substantial savings.
Rohrer said that Oppenheimer's move, while certainly advantageous, is not unique.
“It's a favorable market for tenants right now just because the economy has stopped companies from growing a ton” and opened up space as they have downsized, Rohrer told Twin Cities Business on Wednesday. “You get a lot more creativity in a market that's friendly for tenants.”
Rohrer, whose firm exclusively represents tenants, said that he's working with at least four or five other professional services firms that are similarly trying to take advantage of the tenant-friendly market.
According to commercial real estate firm Cushman & Wakefield, the third-quarter vacancy rate for Class A space in downtown Minneapolis was 17.4 percent-up from 15.9 percent a year ago and 13.5 percent in the third quarter of 2008. Meanwhile, the average asking rental rate for Class A space in that area totaled $27.75 per square foot during the third quarter-up slightly from $28.20 a year ago and $28.10 two years ago.
The market has companies beginning their searches for new leases much earlier than in the past, Rohrer said. Even those who have three or four years left on their leases are beginning to weigh their options and make new arrangements while rental rates are low. Landlords are making attractive offers that encourage existing tenants to re-up their leases well in advance of their expiration-and that secure new tenants several years out.
Oppenheimer is a prime example. Its current lease doesn't expire until 2012, but it began exploring options in early 2009, Rohrer said.
The firm's new space is stripped to the studs, but it has hired an architect to design the space in a way that allows it to improve productivity and efficiency, Letscher said. For example, less space will be devoted to paper files so that more can go online. “Our footprint might be a little smaller than it has been in the past,” he explained.
Oppenheimer employs about 200 people. It hopes to move into the new space in late fall 2011-although it may not happen until early 2012. The law firm is Minnesota's ninth-largest based on its number of licensed Minnesota attorneys, of which there were 110 as of April.