Big name companies are coming to Eagan. Is the suburb’s success a model for others?

The number was big, but not one Eagan wanted to brag about: more than 2 million square feet of office space sitting vacant, a consequence of companies shrinking their massive campuses as employees traded cubicles for home offices.

But that was last year.

Today, the south metro suburb is undergoing a spurt of commercial and residential growth.

An Amazon distribution center, plus about 100 townhouses, are set to supplant part of Thomson Reuters’ shuttered corporate campus. Solventum, the 3M health care spinoff, intends to open its headquarters in a building that Blue Cross and Blue Shield of Minnesota once claimed. And an array of affordable and senior housing could replace an empty Delta Air Lines data center.

“What you’re seeing is the evolution of Eagan continuing to be that community that is able to do big things,” Mayor Mike Maguire said.

Yet the city’s present success was never guaranteed.

The market value of the Blue Cross property dipped by nearly $800,000 in the pandemic’s immediate aftermath, records show. And pandemic-induced office closures bruised suburban economies all around, including Eagan’s, said Jon Althoff, the president of the Dakota County Regional Chamber of Commerce.

The city of 69,000 people, nevertheless, weathered the health crisis, Althoff said, going on to attract a slate of big corporate names.

How did Eagan pull it off?

Two years ago, Community Development Director Jill Hutmacher pulled the mayor and a council member aside and laid out the challenges facing the city.

Thomson Reuters, a major Twin Cities employer, had just announced plans to sell most of its sprawling Eagan office campus. Soon after, insurance giant Blue Cross reported it was shrinking its Eagan headquarters, citing a growing share of remote workers. And three campuses near a prominent park — Argosy University, plus Delta Air Lines and a Unisys site — remained empty or would soon go dark.

Hutmacher’s message at the time was clear, the mayor recalled: The city ought to start planning for the economic fallout of widespread office closures.

Leaders got to work, hiring a consultant to create a road map for redevelopment around Eagan Central Park, City Planner Mike Schultz said. The vision included a walkable medley of trails, parks and restaurants, with modern offices and housing supplanting shuttered corporate buildings.

“The city was very proactive,” Schultz said.

Eagan officials likewise had a hand in the Thomson Reuters redevelopment, he added, first ensuring the company’s new, smaller facility remained in the city. Then, when a Minneapolis-based real estate developer announced it was purchasing the bulk of the original campus, city leaders collaborated with Ryan Cos. to develop a concept for the site.

Peter Fitzgerald, Ryan’s vice president of real estate development, said the city’s hand in the project led to a “balanced development” — a plan that preserves green space and adds housing while boosting tax revenue in Eagan. Crews are currently demolishing the old building to make way for an Amazon distribution center and dozens of townhouses.

Both city leaders and the company agreed it was wiser to tear down the building and construct something better, rather than undertake the expensive work of retrofitting the existing office for a new use.

“It’s really looking at the highest and best use of the land, as opposed to the highest and best use of the buildings,” he said.

The Dakota County Community Development Agency (CDA) took a similar approach when it purchased an obsolete Delta Air Lines data center in September with plans to raze the structure and build over 1,000 units of new housing, Executive Director Tony Schertler said.

The city will dictate the type of structures the CDA will build, added Schertler, who noted Eagan needs affordable senior housing as its population ages.

“This is the city’s vision, and we’re helping bring together the resources to accomplish it,” he said.

Meanwhile, Blue Cross relocated to a smaller campus elsewhere in Eagan. And its old building’s future occupant, Solventum, is at work moving its headquarters from Maplewood to Eagan, a $209 million investment that could add over 1,000 jobs to the community.

Maguire, the mayor, said a major benefit of the projects is that people who work in Eagan often end up living there.

“Those employees become constituents,” he said. “They become parents. They become coaches. They get involved in the community.”

The pandemic wasn’t Eagan’s first test.

In 2010, Lockheed Martin’s shuttering of its longtime plant left hundreds of people jobless. The community faced another hurdle a year later when Delta announced it was moving a slew of jobs from Eagan to Atlanta.

But other companies — and franchises — have since moved in.

The Vikings’ move in 2018 to a sleek training facility in Eagan augmented the city’s appeal, Althoff said. And another aspect of the community keeps businesses coming.

“Proximity to the airport is important,” said Samantha Metcalf, a managing principal of the Minneapolis office of CliftonLarsonAllen. The accounting firm plans to open a $10 million employee training space in May at Eagan’s Viking Lakes campus, itself the site of new apartments and tennis courts.

Mark Kolsrud, a vice chair of Colliers’ investment services group, grew up in the south metro and always regarded Eagan as economically robust, with company offices close to desirable neighborhoods for their workers.

“It’s smart as an employer to be near the housing,” Kolsrud said.

John McCarthy, a broker on the recent Thomson Reuters sale, said Eagan’s position between Minneapolis and St. Paul is a boon for business.

“It’s just got a lot of good bones… to be a good business hub,” said McCarthy, a senior vice president of Colliers’ investment services group.

But McCarthy attributed much of the city’s economic success to Eagan leadership, from officials’ proactive approach to city planning to their willingness to collaborate with companies.

Althoff, the chamber of commerce president, has a particular admiration for Eagan: It’s 10 minutes to the airport, connected also to efficient highways and expansive parks. That profile, he believes, helped the city emerge from the pandemic stronger than before.

“Eagan’s like a magnet,” he said. “When things happen beyond the city’s control, the combination of the location, how well the city runs, and the benefits of the city has made people want to stay.”