One of the nation's biggest real estate developers unveiled plans for a 29-story office tower in one of the last undeveloped spots in downtown Minneapolis.

With the project, the firm Hines will test the economic health of Minneapolis at a moment when office vacancies are near historic highs as workers trickle back to their cubicles and companies re-evaluate their space needs.

On Tuesday, the Houston-based company submitted an environmental assessment worksheet for a tower with 719,000 square feet of office space, 21,000 square feet of retail/restaurant space and a three-level underground parking ramp.

Sargent Johnson, managing director for Hines, said construction won't start until the building is about a quarter pre-leased. He expects it to be ready for occupancy in early 2026.

Johnson said the tower, which is being called 900 Marquette, will cater to a post-pandemic workforce that's hungry for the kind of collaboration that people who have been working remotely have missed and with work stations and gathering spaces that will have a much stronger connection to the outdoors.

"We believe that people will come to the office, but they may use it differently," he said. "The question is, 'How do you get them to stay there longer everyday and want to be there?'"

The building was designed by New York City-based COOKFOX Architects, a firm that's known for its cutting-edge, sustainable approach. It'll be clad with copper-colored terra cotta tiles and will have multi-level outdoor terraces and floor-to-ceiling windows that are a rarity in most downtown office towers.

"We know it'll be that next-generation office building that doesn't exist in Minneapolis," Johnson said. "What people miss in the hybrid model is collaboration. People miss being with people and sharing ideas."

Hines has developed hundreds of office buildings around the world for decades and currently manages more than 600. The firm built its first office tower in Minneapolis in 1980 when it completed the Pillsbury Tower, now called U.S. Bank Plaza. It later built Wells Fargo Center and 50 South Sixth.

In the North Loop, Hines developed T3, the first timber office building in North America, and is currently constructing the North Loop Green, a two-block, mixed-use project with two towers, one for offices and one for apartments.

Johnson said the site at Marquette Avenue and S. 9th Street, which is now a surface parking lot, has been on the company's radar for several years because of its proximity to public transportation and its location. The company paid $8.4 million for the site in December 2020.

"A lot of sites were being snapped up for multi-family projects," Johnson said. "This is the last best site for a really great office development and we decided to acquire it."

The site is next to the historic Young-Quinlan Building at Nicollet Mall and S. 9th Street and is perhaps best known for a three-story black-and-white mural of a musical score painted on an adjacent building that was once the headquarters of Schmitt Music.

Prince helped make that mural famous when he posed in front of it in 1977. It's also been a backdrop for Lizzo and Van Cliburn, who played a Steinway concert grand piano in front of it.

The mural, Johnson said, was incorporated into the design of the building and will become a focal point for visitors and office workers. A more than 20-foot gap between the wall with the mural and the new tower will accommodate a bike entry into the tower and an outdoor "urban garden room" with plantings and seating.

A staircase from the sidewalk to the second level of the building will provide access to a skyway and an indoor gathering space that will offer direct views of the mural.

The proposal comes at a particularly challenging time for downtown Minneapolis, where development stalled during the worst of the pandemic and the office vacancy rate has hovered at nearly 30%.

Jeremy Jacobs, managing director for Colliers, said that despite all the challenges facing downtown, the decision to build a new tower makes sense.

"There's no shortage of quality office space downtown, but what Hines is proposing would be superior to what's otherwise available downtown," he said.

Jacobs said that aside from the 37-story RBC Gateway Tower that was recently completed along Nicollet Mall, downtown hasn't seen a new multi-tenant office tower in decades. The RBC Gateway Tower, which also includes a Four Seasons hotel and condominiums, was fully leased when it recently opened.

He said the dynamics of the office market in the metro are changing quickly. As the office vacancy rate in many nearby suburbs has fallen, the cost of that space is increasing and that's forcing many tenants to consider more affordable space in downtown Minneapolis.

"At some point the economics do make a big difference in a company's decision-making process," Jacobs said. "There will be a point where downtown will be attractive for a lot users for that reason."

Tom Tracy, executive director at Cushman & Wakefield, said that while downtown has lost some key tenants, there's been relatively little migration to the suburbs. In recent months, there's been a notable uptick in the number of inquiries and tours by prospective tenants. And in the North Loop, he said, demand for office space is at pre-pandemic levels and rents are on the rise.

"News of the demise of the downtown Minneapolis office market is greatly exaggerated," he said.

There are large vacancies to fill, including the Dayton's Project, the former flagship department store that has been renovated on Nicollet Mall, and at the 51-story City Center tower, which was left with a nearly 1 million square feet of empty space after Target Corp. downsized.

Ryan Cos., which manages City Center, said on Tuesday that Fox Rothschild, a national law firm, is relocating its Minneapolis headquarters to City Center in November. The firm will occupy 39,081 square feet of Target's former space including half of the 36th floor and all of the 37th floor.

"It's the beginning of a new chapter for City Center," Jim Durda, City Center's general manager, said in a statement. "The impact of the pandemic was profound, but we're optimistic that downtown Minneapolis is on the uptick again."