Ramstad: We have too much commercial office space. It’s time to consider tearing down some towers

Shortly before Christmas, some of the most powerful business leaders in Detroit proposed tearing down two of the five towers of Renaissance Center, which for 50 years has been the most prominent feature of the city’s skyline.

General Motors, the biggest tenant of the buildings, is planning to move out. Working with Dan Gilbert, founder of Rocket Mortgage and a leading developer in Detroit, the automaker plans a $1.6 billion makeover of Renaissance Center.

That includes taking down the two towers in what the Wall Street Journal said is the nation’s largest conversion of office space.

It’s a phenomenon known as voluntary demolition that’s common in Asia, where urban density helps drive it, and it has picked up momentum in the U.S.

No owners of major towers in Minneapolis and St. Paul have publicly proposed tearing them down. But we should not be surprised if some do. And if they ask for public funds to help — as GM and Gilbert have in Detroit — I think we should listen.

Teardown costs vary widely, though taking down a skyscraper in a dense downtown costs more per square foot than a shorter building with plenty of area around it. Another significant expense may be time waiting for the market to develop for whatever comes next.

Entities like the St. Paul Port Authority have a lot of experience acquiring distressed properties and holding onto them until a suitable reuse comes about. I don’t often say government should step into the free market, but the distortion between having too much office space and not enough residential space in the Twin Cities, in my view, rises to a level requiring government attention.

When I mentioned the prospect of tearing down skyscrapers recently to St. Paul Mayor Melvin Carter, he didn’t agree outright, but said he’s watching what’s happening in Detroit.

“Detroit’s a fascinating urban case study,“ Carter said. ”Because they’ve had to transform their city, and they had to start a long time ago and they had the benefit of this guy Dan Gilbert.”

In New York, JPMorgan Chase recently took down its former headquarters on Park Avenue, a 52-story building originally built as the corporate home of Union Carbide in 1961. The bank built a 72-story building in its place that will open later this year.

Singapore in 2023 completed the largest-ever demolition of a skyscraper, bringing down a 65-story building built 37 years ago. Now in Chicago, there is speculation that a prominent 65-story building on Wacker Drive next to Willis Tower may be torn down after standing for just 35 years.

Ten years ago, the Minnesota Star Tribune played a part in transforming downtown Minneapolis by selling five city blocks it owned, allowing for the tearing down of two (considerably shorter) buildings that were part of an area once called Newspaper Row. The older and larger of the two dated to 1947.

Guided by city leaders, two office buildings, a park and two apartment buildings were built on those blocks. I haven’t missed our old office, with its low ceiling and massive floorplates, and now we are adjusting to the remote-work era by downsizing the space we occupy in a skyscraper a few blocks away.

Axios’ Nick Halter, a longtime reporter of the Twin Cities real estate scene, recently suggested the new owners of the Timberwolves and Lynx pro basketball teams consider tearing down the 41-year-old City Center, which includes a 52-story tower that Target is no longer using, for the new arena they’ve said they want to build. Halter speculated Target Center could also then be demolished.

Historic preservationists don’t like the voluntary demolition movement. The conversion of Detroit’s Renaissance Center in recent weeks has been challenged by prominent voices in its local preservation movement.

“It’s not normal,” Craig Wilkins, an architecture professor at the University of Michigan, said about the prospect of tearing down two towers there. “It’s becoming more common, but that is an extreme decision.”

Wilkins, who got his Ph.D. at the University of Minnesota, said Detroit’s situation is quite different from the Twin Cities, owing in part to the role that four local billionaires, including Gilbert, play there.

“The average lifecycle for a piece of architecture is about 75 years,” he added. “This isn’t even close to that. And then you have the idea of adaptive reuse. Lots of properties, office buildings, homes, even shopping malls have been converted.”

The Twin Cities has an excellent record of reusing old structures, such as the flour mills along the river. That said, we also have people who I think go too far by trying to preserve outdated grain silos, neighborhood churches they didn’t attend or public schools that have been closed for years.

Environmentalists are also skeptical about demolition. Notably, in the biggest recent teardown in the metro area — the 10-story Southgate office building in Bloomington two years ago — materials were sorted for reuse and recycling.

My colleague James Lileks wrote two years ago that we’re unlikely to again see another skyscraper built mainly for office use in the Twin Cities. The most recent towers in Minneapolis have predominantly been for residences and hotels.

With population growth so low and vacancy rates so high in both downtown Minneapolis and St. Paul, the values of tall buildings in both Minneapolis and St. Paul have collapsed.

The recent sale of the former Ameriprise headquarters in Minneapolis at a tiny fraction of the price it fetched in 2016 has become the shining example of that. In January, Lileks creatively imagined that building becoming a sports complex with multistory climbing walls and go-kart tracks.

I reached out to the building’s new owners but didn’t hear back. Likewise, city officials in Bloomington tell me they haven’t heard what the owner of the site of the torn-down Southgate wants to do with it. The site is zoned for commercial use, including multifamily housing.

A lot of things feel up in the air in Twin Cities commercial real estate at the moment. Some may need to come to the ground.