Reverse Migration: Is Downtown the New Boom Town?

Posted by Kris Lindahl on Tuesday, September 10th, 2019 at 1:07pm.

Urban Office Development No Longer Means Strictly City CenterIs it a relatively unique phenomenon or a lasting trend? A growing number of area companies have already, or are planning to consolidate their workforce in downtown buildings within the coming year. St. Paul-based Merrill Corp. will relocate more than 300 employees to two buildings of the former Baker Center in downtown Minneapolis by early 2020. Stantec moved approximately 175 employees from Roseville offices to new quarters in Baker Center in early 2019. These are no longer isolated occurrences.

McDonald's moved from its suburban campus to downtown Chicago last year. Millennials are sometimes credited with the shift in corporate real estate. Not yet ready to settle in traditional suburbs, this is the generation that seeks work-life balance, and they are serious about making time for culture and entertainment, leisure activities and family life. They do, however, want it all close by. They embrace the opportunity to live within walking distance of their offices, and they want their shops and restaurants convenient and easy to get to quickly.

The Changing Face of 21st-Century Business

Even though other high-profile firms boast about the benefits associated with decentralization, going virtual, and their newfound ability to downsize physical space requirements due to job-sharing, remote work options and flex-scheduling, an increasing percentage of large companies is moving in the opposite direction. Many firms are moving, once again, to the urban core.

A second, equally interesting, destination for businesses trying to boost employee engagement and satisfaction, is the corporate campus. Numerous business centers exist on what were once the borders between a sprawling metropolis and surrounding bedroom communities. Over time, some of these fringe business developments have become small cities in their own right, featuring landscaped grounds and amenities that include shopping, restaurant and entertainment options, sports facilities, parks and green space, and nearby residential housing.

In places like Dallas, Minneapolis, Newark, Boston and Chicago, these one-time suburban business centers are being reexamined and reborn. They are being redesigned—and rebuilt—to include not only commercial renovations, but also abundant new features.

A 120-acre former AT&T headquarters in suburban New Jersey has been envisioned as a future "Metroburb," according to enthusiastic planners. Rather than continuing to exist as a workday-only business center, it is viewed as an example of what has always been deemed the best part of city life—a compact core with multiple opportunities to live, work and enjoy, all with an emphasis on multi-purpose diversity.

Millennials, especially, embrace the idea of live, work and play space in a single location, with no need for a lengthy commute. But older workers, including Baby Boomers who choose to continue working, also appreciate the distinctive urban focus and pedestrian-friendly ambience.

These cosmopolitan business communities have also attracted the attention of city planners, who are beginning to rethink metropolitan bus routes and light rail services. The result is a confluence of the best of old and older. These new centers are reminiscent of the small towns of America's past, at a time when commerce and community coexisted harmoniously. Residential condo towers, shopping, upscale dining options, health care, leisure and entertainment facilities, and even educational institutions all find a place in this innovative and creative emerging market.

The Outlook for Business in the Twin Cities

An example is the former Target West Complex in suburban Minneapolis, now undergoing a $5.6 million renovation. It is a unique multi-story building rather than a corporate campus in the strict sense, but it is situated on a 27-acre site in the midst of lakes and green space, rather than in the center of a sea of concrete and parking garages. The prime property was purchased by the Opus Group in 2016, and new space is currently 82 percent leased, according to a spokesman. The first new tenant, Tactile Medical, is slated to occupy its new space in September. Existing letters of intent on the remainder of the office space should assure that the 307,000 square-foot building will be fully occupied early in 2020, according to the developer.

Urban growth patterns have the effect of bringing former outlying locations closer to the center. Target first occupied the building on Minneapolis' western border more than 50 years ago, when it was the first major office building to be built outside the downtown core. Today, the location is considered ideal for employees. Residential neighborhoods are nearby, lakes and green space are adjacent, and the city's downtown business center is close enough to be convenient.

A remodeled cafeteria features direct access to employee basketball and croquet facilities that were preserved from Target days. A tenant lounge occupies the top floor, with an adjacent rooftop patio. Each floor includes a glass-walled "bumpout" with a view of the downtown city skyline. Functional renovations retain the mid-Century ambience of the building, but embrace innovation, acknowledge the need for work-life balance, focus on convenience as well as efficiency, and incentivize out-of-the-box thinking.

There is little doubt that the coming decade will usher in even more options for corporate expansion and commercial development in Hennepin County. There is even less doubt that the generational shift will continue to influence not only how and where the way future business is transacted, but also the shape and the design of physical spaces that will contribute to a new and vital corporate culture.

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