As transformative as a $400 million development project will be for one side of downtown, it threatens to leave another side with some gaping holes should Wells Fargo choose to pick up and leave some of its downtown offices.
It’s space that won’t easily be filled given current office market dynamics, and the company’s effort to consolidate workers will cast its own economic ripples, said Brent Erickson, senior director at Cushman & Wakefield/NorthMarq.
In the Twin Cities, the bank’s huge workforce is spread across at least 16 locations from Eden Prairie to Eagan to Shoreview. About 7,000 of the more than 20,000 employees Wells Fargo has in Minnesota work in downtown Minneapolis, in 14 buildings.
The bank has said it plans to stay put in its local headquarters downtown in the tall, golden Wells Fargo Center next to the IDS Center. Everything else appears to be up for grabs.
“It’s a big guessing game,” Erickson said.
Paige Rickert, a downtown office leasing broker with CBRE, said it will take time for Wells Fargo to fill in the details of its plans.
“I think it will be 24 months at least before we find out where they’re coming from,” Rickert said. “I think we’ll be asking this question a year from now.”
Real estate professionals say candidates for consolidation include the bank’s big Wells Fargo Home Mortgage campus in south Minneapolis, which is full, and several of its downtown office spots.
Those include the Northstar Center, where it leases about 520,000 square feet, and the Baker Center, where it leases about 450,000 square feet. Both buildings are old, but the cheap Class B office space could play in favor of the bank staying.
If the bank were to shift those workers to the Downtown East space, local retailers would clearly take a hit. But the greater impact, some brokers said, would fall on the owners of those specific properties.
A few suggested that the buildings might be best redeveloped for another use altogether, such as apartments, or perhaps even torn down.
The Travelers Cos. Inc., the New York-based insurer that owns the Baker Center, declined to comment. PCCP LLC, a real estate investment firm in Los Angeles that owns the Northstar Center, couldn’t immediately be reached for comment. The company handling leasing for Northstar said Wells Fargo and PCCP are talking.
“There’s a lot of discussion about that right now with PCCP and there will be some sort of strategy development over the next couple of months,” said Frank Jermusek, president of Northco Real Estate Services in St. Louis Park. “They’ll probably have to make some difficult decisions over the next couple of months or the next year.”
The building is in an excellent location, Jermusek said, and is still “in relatively good shape.”
While some real estate professionals argue that Baker and Northstar are functionally obsolete for offices, Rickert disagrees.
“If Wells Fargo moved out of everything they had in those two buildings it would be four [or] five years for those buildings to get their occupancy back up to good levels,” he said. “If those owners are willing to put in some updates to those buildings, there’s a market for them.”
Retaining the jobs within the downtown is worth such a potentially painful loss, said Steve Cramer, president and CEO of the Minneapolis Downtown Council and the Downtown Improvement District.
“I don’t discount the challenge that filling those vacancies will present to the property owners,” Cramer said. “But looking at it from an overall perspective, the Downtown East project really hits so many of the goals of the Downtown Council’s 2025 plan that it’s one that we clearly support.”
Chuck Lutz, deputy director of the city of Minneapolis Community Planning and Economic Development, said he’s heard a range of possibilities, including shifting workers to Minneapolis from Charlotte, N.C.
“They’re not talking,” Lutz said of the bank. “I wish I knew more, just like everybody else.”