At a time when more workers are returning to their downtown offices, AT&T’s employees are moving out of the tower of the same name 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 complete by the end of August, allowing us to use our office space more efficiently,” 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.”[ads1];
Owen declined to say how many people the move would affect. Shari Wojtowicz, president of the Communications Workers of America Minnesota State Council, said the decision will affect at least 260 workers in the building, mostly teleconference specialists and collection workers who have worked there since 1992 and returned to their offices late last year.
She said the number does not include managers, salespeople and other non-union workers, including many who may still be remote or come into the office on a regular basis.
Twin Cities-based Ryan Companies built the tower and now manages it. Jami Klausen, Ryan’s general manager for the tower, said that as AT&T prepares to move later this year, discussions are beginning just what the new name of the tower will be.
“The AT&T Tower is one of the iconic fixtures of the Minneapolis skyline, and we look forward to starting a new chapter,” Klausen said. “AT&T has been a valued, longtime tenant and we wish them the very best.”
The news, as Axios first reported, comes as many other workers are slowly returning downtown. Persistently high office vacancies have dogged the area since the start of the pandemic.
AT&T has been the anchor tenant in the building since its inception in 1991. The tower – clad in glass that reflects its neighbors, including the Foshay Tower – is a distinct presence in the skyline as the crown of the tower appears to unfurl like a blooming flower.
Over the years, the company has slowly shrunk space in the building and now occupies only about 95,000 square feet on five lower floors, according to commercial real estate agent Cushman and Wakefield.
“This is an understandable decision,” said Tom Tracy, managing director of Cushman and Wakefield. “Just like everyone else, they’re doing more with less and consolidating.”
Tracy said that while downtown leasing rates remain light, major tenants, including law firms and financial services companies, are doubling down on their commitment to downtown.
“Even though they might be right-sized or moving to different areas because of the way they do business, they usually 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 in the first quarter of 2023 was 24.3%. That’s only slightly behind the south/airport submarket and 3 percentage points higher than the metro area, according to new data from Cushman and Wakefield. Per firm, the vacancy rate in the central business district was 30% when including vacant space available for sublease.
The firm said last year that new leases totaled nearly 890,000 square feet of office space in the central business district of downtown Minneapolis, a 19% increase from the previous year. Class A space such as the AT&T Tower accounted for 54% of all leasing activity last year, a significant increase from the previous year.
“The best buildings outperform all others,” Tracy said, noting that landlords are wooing potential tenants with top-quality rooms and amenities aimed at luring workers back into the office.
Tracy and his colleagues recently leased nearly 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 victories like that for downtown property owners, AT&T’s decision was not a surprise to insiders.
“It’s been in the works for quite a few months,” said Steve Cramer, executive director of the Minneapolis Downtown Council.
Cramer said he sees the move as another case of a company adjusting its real estate portfolio in the changing office market more than a rejection of downtown.
“It’s not good news, but I can understand that,” Cramer said. “It’s much more about, ‘This is the most economical and efficient real estate decision for our company.'”