The high number of corporate headquarters in Minnesota has often been credited as a reason why the region's office market is generally healthier than it is elsewhere in the Midwest. New research from the University of Minnesota confirms that notion. This month, Carlson School of Management Prof. Myles Shaver unveiled a new study that examines the history of the many Minnesota companies which have appeared on the Fortune 500 list of biggest companies in America since the magazine started the list in 1955.
Shaver found not only was Minnesota's preponderance of corporate headquarters evidence of a good business environment, but in terms both of headquarters per capita and the number of HQs compared with gross state product, the Land of 10,000 Lakes ranked first in 2011.
"We are a major headquarters-intensive business community," said Shaver. "While there is appreciation of that regionally, when you look at those numbers, I don't think even we appreciate how intensive it is here."
Minnesota had 20 Fortune 500 company headquarters in the magazine's 2011 ranking, placing it in an eighth-place tie with New Jersey and Virginia. But in terms of population Minnesota was first with 3.77 headquarters for every 1 million people, handily beating Connecticut and New York.
(On Monday, Minnesota slipped to No. 2 in the per capita ranking when Fortune released its latest list; Connecticut added two Fortune 500 companies while Minnesota lost one and now has 19. Shaver's research is based on the 2011 ranking.)
Minnesota's high share of corporate headquarters was even more pronounced when compared with the state's gross state product, Shaver found. By that measure, the state led the way with 74.1 headquarters per $1 trillion of economic activity, far outpacing the second-place finisher, Michigan.
And it's not just the sheer number of headquarters companies in Minnesota that's so impressive. Minnesota has managed to replace the headquarters that it loses in ways that few other states can claim.
In 1955, Minnesota had 11 Fortune 500 corporate headquarters, of which only three are still around. That includes 3M, General Mills and Hormel Foods. That means eight of the originals had been replaced, and that by last year's Fortune ranking, nine more had been added for a total of 20. That net increase of nine companies since 1955, when scaled for the state's population, put Minnesota second only to Nebraska. The state had lost 31 Fortune 500 corporate headquarters, but had added 40 new ones between 1955 and 2011.
"That stability is a big thing in terms of the corporate real estate market," Shaver said. "It's a fairly diverse set of industries. So it's not like in some other states where it's all technology companies, or all energy companies."
Dick Keller, a first vice president with CB Richard Ellis, concurs with Shaver's findings. Keller said that Minnesota's lower unemployment rate (5.8 percent in March vs. 8.2 percent nationally) is in part because so many of Minnesota's Fortune 500 companies are doing more hiring. Office rental rates are projected to take a healthy jump.
"We have a pretty diverse economy here -- everything from banking to Target, Best Buy and 3M," he said.
Don Jacobson is a St. Paul-based freelance writer. He can be reached at 651-501-4931.
