Target Ending Operations at City Center
Minneapolis-based Fortune 500 retailer Target Corp. is ending its operations at the City Center complex in downtown Minneapolis. Boom.
The unexpected news is arguably comparable to a bomb going off in the downtown Minneapolis office market. Target leases 985,000 square feet of space in the office tower and has nearly 3,500 employees there. The office tower is now dubbed 33 South Sixth Street.
Target’s headquarters employees were informed of the decision with an email on Thursday morning. The latest statistics from the Minneapolis Downtown Council cite Target as downtown’s largest employer with 8,500 staffers in the central business district.
Target emphasized that no staff is being laid off in connection with the decision. The retailer’s headquarters will remain in downtown Minneapolis. The company will still own and lease more than 3 million square feet of office space in the Twin Cities. Employees who have been based at City Center will either continue working from home or relocate to other Target locations in downtown Minneapolis or to its northern campus in Brooklyn Park.
It is not clear exactly when Target will leave the 33 South Sixth Street space. The message to employees from Melissa Kremer, executive vice president and chief human resources officer, said that staffers were being informed “early.” Kremer added: “For the nearly 3,500 team members who are based in City Center, you’ll get more information in the coming weeks and months.”
Kremer’s email noted how work has changed since the pandemic took hold in the spring of 2020:
“Over the past year, I couldn’t be more proud of how our team has successfully navigated a remote work environment amid the pandemic. I recently shared with you that we are embracing this moment to think differently and reimagine the future of work at headquarters. Our hybrid ‘Flex for Your Day’ approach will offer team members the benefits of both virtual and on-site collaboration when we gradually return to headquarters later this year.”
Bottom line? The flexible, hybrid work model doesn’t require as much office space.
Target recently disclosed that employees won’t be expected to return to downtown Minneapolis until the fall.
Minneapolis Downtown Council president and CEO Steve Cramer acknowledged that the move means less occupied office space in downtown in the short term, but he has faith in the future.
“This space downsizing is to accommodate their hybrid work model,” he said in an email. “They are also making investment in their office spaces to accommodate the future of work for their employees. Target expects to remain the largest downtown employer, but as we know for them and others not every worker will be in the office every day…They’ve also pledged to work with Ryan [Companies] on the re-leasing of City Center.”
Target’s real estate decisions have always been watched closely in downtown Minneapolis. When the company renewed its lease at the tower in 2009, the Star Tribune headline reflected the downtown business community’s relief: “Target to stay put in City Center.” According to the report at the time, the company’s lease was slated to run until 2023 with renewal extension options through 2038.
Target’s departure from 33 South Sixth Street will leave a big hole in the downtown Minneapolis office market. A market report from Chicago-based Cushman & Wakefield put the vacancy rate at the end of 2020 at 19.9 percent. That number climbs even higher to 21.9 percent vacancy when available sublease space in downtown is counted.
The office tower now known as 33 South Sixth Street was completed in 1983. It is one of the largest office buildings downtown with more than 1.4 million square feet of office space. Despite the current official name of the office tower, many Minneapolis lifers still refer to the entire complex – with office, retail, a hotel and a parking ramp – as City Center. Target was an original tenant in the building.
A leasing listing for the building before the Target news broke indicated that there was about 74,000 square feet available for lease. That translates to a vacancy rate of under 5 percent for the building, which has been an enviable number in downtown Minneapolis.
The office building was originally known as the Multifoods Tower because it served as headquarters for International Multifoods, once a large presence in Minnesota business circles.
The retail part of the complex was always known as City Center. During the 1980s it was a busy and bustling downtown shopping destination with three floors of retail tenants and a food court.
The City Center complex is managed by Minneapolis-based Ryan Companies. The property’s office leasing is handled by a local team of brokers from Chicago-based JLL. Ryan recently spruced up the building’s retail space with a renovation.