Portico Benefit Services will relocate its workers from downtown Minneapolis to Edina.

The nonprofit that operates the health and retirement benefits for the Evangelical Lutheran Church in America (ELCA), occupies about 60,000 square feet of space in the 20-story RSM Plaza building at 800 S. Marquette Av.

City officials confirmed that the business is headed for the suburbs — at 7700 France Av., — as it needs less space. Portico officials could not be reached for comment.

Portico Benefit's downtown Minneapolis footprint is estimated to house a few hundred employees. While a comparatively small hit for the city, it comes just weeks after Target Corp. said it will vacate nearly 1 million square feet of office space in City Center — about one-third of the retailer's downtown space — as it embraces a flexible work arrangement that reduces its need for offices.

Portico's decision also comes amid concerns that downtown Minneapolis, like other major central business districts, could be upended by changes in how and where work gets done post-pandemic. Also, Minneapolis has been the focus of concern over rising crime, protests and last year's riots following the death of George Floyd. Last fall, several downtown employers threatened to leave the city if proposals to eliminate or defund the police force advanced. Such proposals didn't advance as the city enhanced public-safety funding, said Jim Montez, vice president with the office-leasing firm Transwestern. "Safety is top of mind for every employer and employee in the city," he said.

Steve Cramer, CEO of the Minneapolis Downtown Council, said Portico's departure was not driven by crime and does not signal the beginning of a mass departure from the city.

Portico, like Target, decided it needed less space after adopting a work-from home model for employees. Portico's future space in Edina is believed to be less than half of the space it now rents in Minneapolis.

Cramer said that for months, Portico participated in the Downtown Council's phone calls with human resource leaders from across the city.

"It was clear by the end of 2020 they were heading in the direction of a reduced need for space related to their new model of [hybrid and remote] work. Wish they had stayed downtown of course, like Ernst & Young, Fredrikson & Byron," and Target.

Cramer added that property and leasing executives surveyed last summer by the council revealed a "high level of concern about the environment downtown."

"When we did the initial survey, it showed there were a lot of companies that were kicking the tires [about leaving downtown] but that has abated quite a bit," Cramer said. "Still, it will not be shocking to me if we hear about a few other companies deciding to downsize, or deciding to also move to a different location" outside the city.

With more corporations such as Wells Fargo announcing that workers will soon return to the office after a year sequestered at home due to COVID, "I think the trajectory of the downtown will be positive over the coming months," Cramer said. Ernst & Young recently announced it would stay in downtown, moving from U.S. Bank Plaza into the newly remodeled Dayton's Project building on Nicollet Mall.

Deluxe Corp. is relocating its headquarters to downtown Minneapolis, and Principal Financial also chose downtown for a new office. The city's newest office tower, RBC Gateway, is scheduled to be completed next year.

With all that action, "It's one of my go-to talking points about the future of downtown being bright, despite the negative impacts we are seeing this year," Cramer said.

Dean Williamson, president of the Frauenshuh Commercial Real Estate firm that owns the five-story Edina building where Portico will move, said Portico could start relocating about 200 workers into the third floor by the end of summer.

He said Portico liked the 770 France Avenue location because of newly remodeled indoor spaces.

Dee DePass • 612-673-7725