AT&T leaving namesake downtown Minneapolis tower for suburban facility

AT&T leaving namesake downtown Minneapolis tower for suburban facility

At a time when more workers are returning to their downtown offices, AT&T employees are leaving its identical tower in Minneapolis.

The telecommunications company said it is moving all operations currently conducted in the 34-story building at 901 Marquette Av., to a facility about 10 miles south in Bloomington.

“The move will be completed by the end of August, allowing us to use our office space more effectively,” said Clay Owen, director of public relations for the company. “It’s important to note that these jobs will remain in the greater Minneapolis area and we remain committed to Minnesota.”

Owen declined to say how many people the move would affect. Shari Wojtowicz, president of the Minnesota State Council of Communications Workers of America, said the decision will affect at least 260 workers in the building, mostly teleconference specialists and collections workers who have worked there since 1992 and have returned to offices. theirs at the end of last year.

She said that figure does not include managers, sales people and other non-union workers, including many who may still be remote or who come into the office periodically.

Twin Cities-based Ryan Companies built the tower and now manages it. Jami Klausen, general manager of Ryan’s tower, said that as AT&T prepares to move later this year, discussions are just beginning about what the tower’s new name will be.

“The AT&T Tower is one of the iconic landmarks of the Minneapolis skyline, and we look forward to starting a new chapter,” Klausen said. “AT&T has been a valued and long-standing tenant, and we wish them the best.”

The news, which Axios first reported, comes as many other workers are slowly returning downtown. Continued high office vacancy rates have plagued the area since the start of the pandemic.

AT&T has been the building’s anchor tenant since its inception in 1991. The tower — clad in glass that mirrors its neighbors, including the Foshay Tower — is a distinct presence on the skyline because the crown of the tower appears to unfold like a flower bloom.

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 real estate broker Cushman and Wakefield.

“This is an understandable decision,” said Tom Tracy, executive director at Cushman and Wakefield. “Like everyone else, they’re doing more with less and consolidating.”

Tracy said that while the pace of leasing downtown remains light, major tenants, including law firms and financial services companies, are doubling down on their commitment to downtown.

“While they may right-size or move into different spaces because of how they’re doing business, they generally say, ‘We’re going to stay downtown.'”

The AT&T Tower is more than 80% leased, according to Ryan Companies, but the office vacancy rate for the central business district in downtown Minneapolis during the first quarter of 2023 was 24.3%. That’s just behind the south/airport submarket and 3 percentage points higher than the metro area, according to new data from Cushman and Wakefield. According to the firm, the central business district’s vacancy rate was 30% when vacant space available for sublease was included.

The firm said new leases last year accounted for about 890,000 square feet of office space in the central business district in downtown Minneapolis, a 19% increase from the previous year. Class A space like the AT&T Tower accounted for 54% of all leasing activity last year, a significant increase from the previous year.

“The best buildings are outperforming all the others,” Tracy said, noting that landlords are attracting potential tenants with high-quality spaces and amenities aimed at luring workers back into the office.

Tracy and his colleagues recently leased about 45,000 square feet of office space in The 15 Building, a downtown Minneapolis landmark known for its colorful Bob Dylan mural. When leasing began in February 2020, the 12-story, 130,000-square-foot building was 70% leased.

Despite such victories for downtown property owners, AT&T’s decision did not come as a surprise to insiders.

“It’s been in the works for several months,” said Steve Cramer, CEO of the Minneapolis Downtown Council.

Cramer said he sees the move as another case of a company adjusting its real estate portfolio to the changing office market rather than a rejection of downtown.

“It’s not good news, but I can understand,” Cramer said. “This is much more about ‘This is the most economical and efficient real estate decision for our company.'”

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