A month after selling its 75-acre Plymouth campus, Prudential Financial announced it will move into the Dayton's Project building in Minneapolis next year, giving a much-needed lift to the downtown office sector that city boosters fear may never rebound from the pandemic.
Prudential will lease 28,000 square feet inside the former Dayton's Department Store that stretches 12 stories and 1.2 million square feet. The insurance company will be Dayton's fourth tenant, after Ernst & Young, Unilever and Uncommon, a retail marketing firm.
Eddie Rymer, the JLL agent who represented Prudential in the leasing transaction, said his client wanted a centralized downtown location and was drawn to the building's expansive amenities and indoor-outdoor terrace.
"The driver was being in the heart of downtown and the amenities of the building. That tenant's winter lounge is second to none," Rymer said.
Prudential will move into the eighth floor late next year, once renovations and design work by Gensler are complete. Prudential's new office digs will feature flexible work spaces, collaboration areas and enclosed focus rooms.
As many as 300 Prudential employees are expected to use the new office, though only a third will be there at any given time under the company's hybrid work schedule, Rymer said.
About 800 people at one time worked at Prudential's Plymouth location. The pandemic and the trend toward hybrid work diminished the company's space needs, prompting a search last year for new office space.
The Dayton's tower underwent a much-heralded $350 million office conversion. Its completion landed in the middle of the pandemic with a thud. It survived a bitter legal battle over ownership and has struggled to find new tenants amid a slow office market recovery.
As recently as the second quarter, office vacancy rates averaged 30% in downtown Minneapolis and 26% in downtown St. Paul, according to Cushman & Wakefield.
This month, the Minneapolis Downtown Council found that only 55% of workers had returned to their downtown offices given the rising popularity of remote work.
Downtown Council CEO Steve Cramer said the number of returning office workers is expected to rise by year-end as more companies set firmer expectations for office attendance — or follow the lead of Prudential, Principal Financial and Deluxe Corp. in trading suburban digs for downtown space.
"We are so excited to welcome Prudential to the Dayton's Project," said Jim Montez, vice president of leasing agency Transwestern.
"By moving from the suburbs into the Dayton's Project, Prudential will give its employees access to a one-of-a-kind space with high-end amenities and spaces created to facilitate relationships and business advantages," he said.
Last month, Prudential sold its 450,000-square-foot building and 75-acre campus in Plymouth to a pair of Twin Cities development companies led by Dan Salzer and Jeff Koch. The companies plan to spend $300 million converting the Plymouth site into apartments, retail and medical offices.
Prudential is expected to continue working from the old campus until its new space in downtown Minneapolis is complete.
The Dayton's Project is not the only building enjoying renewed leasing activity.
This week, the IDS Center noted that several of its tenants, including wealth management firm Okabena Co. and law practice Lathrop GPM, have renewed their leases or increased their space needs.
The 57-story IDS Center, which is celebrating its 50th anniversary Thursday, is a Class A office building with the kind of amenities and high-quality office space that many companies are now seeking. That's especially true for companies that are downsizing their space as they shift to hybrid work arrangements.
"As many companies embrace hybrid work schedules and solidify their long-term office plans, these lease expansions and renewals prove that the IDS Center remains an ideal option for a wide variety of tenants," said Deb Kolar, general manager of the IDS Center.
MedTrace Pharma recently signed a new lease for about 2,700 square feet while an existing tenant, the law firm Taft Stettinius & Hollister LLP, took an additional 15,500 square feet.