In a few years, an Eden Prairie office building that once housed IT consultants could become an assisted living facility. A developer wants to build affordable apartments where a small office park now stands in Edina. And in Plymouth, a 450,000-square-foot office building was razed last year to make way for apartments.
Twin Cities suburbs confront post-COVID office vacancies
Many suburban communities built their tax bases on corporate headquarters that now sit empty.
June 10, 2023 at 7:00PM
Just like Minneapolis and St. Paul, Twin Cities suburbs are finding that, post-pandemic, residents need fewer offices and more homes, labs, warehouses — anything besides cubicle farms. Big companies are trying to figure out if they still need the hundred-acre campuses they built or bought before the work-from-home era, while smaller companies are pondering offices with less square footage but more glitz and amenities to lure workers.
Emptying offices could spell trouble for first- and second-ring suburbs, which drew companies with abundant space in the 1960s and 1970s, building their tax bases on corporate headquarters that now sit empty.
"We do have a lot of office space, a lot of it vacant," said David Lindahl, Eden Prairie's economic development director.
Every city is dealing with the same issue, he said: "If you have offices in your communities, there are vacancies."
New uses
Not all office buildings will be easy to convert to homes, like the office-to-assisted-living development proposed in Eden Prairie, which could eventually house 112 people.
Some larger buildings would make for awkward apartments or condos, Lindahl said, but he sees promise in other commercial uses, such as lab space for biomedical companies or doctors' offices.
Recently, Lindahl said, he was interested to see a proposal to use a Chicago building to grow produce indoors. Maybe there are Eden Prairie buildings that could be suited for indoor agriculture, he said — or even commercial cannabis cultivation in a few years.
In nearby Bloomington, officials have focused on developing a semiconductor manufacturing hub. And Eagan has built some of the Twin Cities' largest post-office projects in recent years — even before the pandemic. A Blue Cross Blue Shield office became apartments. The former Boeing office was torn down to make way for a shopping center and restaurants. The old Northwest Airlines campus has become Viking Lakes.
The churn continues around the metro area as companies announce they are abandoning suburban offices, such as Wells Fargo leaving its leased space in St. Louis Park, UnitedHealth listing its Minnetonka headquarters for sale and UNFI deciding not to renew its lease on its 107-acre Eden Prairie campus.
A new balance of commercial and residential property could have huge implications for cities' tax bases — especially if commercial buildings become residential buildings taxed at lower rates. But Jeremy Barnhart, Eden Prairie's city planner, said so far leaders in the west metro city haven't approved many commercial-to-residential projects.
Barnhart gets a lot of inquiries about converting commercial properties to a residential use, he said, but the assisted living facility is the only one approved so far. Sewer infrastructure is a major complication, he said, and worries about traffic can make apartments and condos a hard sell for neighbors.
Infrastructure and location have also prevented any conversions from office to residential use in St. Louis Park. There, said economic development manager Greg Hunt, owners of office buildings are renovating in an effort to attract and retain commercial tenants. New high-end office buildings are also doing well, he said, such as the 11-story office tower near Interstate 394 and Highway 100 known as 10 West End. The building, completed in 2022, is marketed as high-end and environmentally-friendly — and is almost fully leased, Hunt said.
Wait and see
Lindahl said he likes to stay optimistic about the future of office space. Office workers might come back to Eden Prairie, though maybe with new companies.
"I do see the suburbs as still being a desirable location for a lot of businesses and workers," he said.
Free parking can be a draw, he said, and some office areas will be close to the Green Line light rail when the extension opens.
It might take two or three years for a large building to attract a tenant, he said, but something often happens.
"In some cases a company will come out of nowhere and say: 'This fits our needs.'"
The governor said it may be 2027 or 2028 by the time the market catches up to demand.
