After a year of construction and $20 million in upgrades, owners of the Two22 Tower in downtown Minneapolis are ready to show off the newly renovated 42-story building, formerly known as Campbell Mithun Tower.
The structure that darts its way into Minneapolis' skyline at 222 S. Ninth St. and Third Avenue was purchased by Richmond, Va.-based Lingerfelt CommonWealth Partners in July 2019.
Renovations began in March 2020, when the pandemic sent most downtown office workers home.
General contractor Gardner Builders plus the Nelson Worldwide design firm have since overhauled the Class A tower's elevator banks, lobby, atrium and skyway with sleek marble, high-technology and security features. They added indoor and outdoor rooftop terraces, video conference rooms and a pool table room and also renovated the first and second floors plus various tenant spaces.
The skyscraper's public spaces were last renovated in 2006.
The refreshed building is now two-thirds leased. Tenants include Principal Financial, Craig-Hallum Capital Group, private equity firm ShoreView Industries, payroll services company CBIZ, Berkley Risk Administrators and the law firm of Fox Rothschild.
Cushman & Wakefield now is searching for new tenants to fill the remaining 240,000 square feet of vacant space, which is mostly on the 15th to 21st floors and the 23rd and 24th floors, said Katie Tufford, senior director of Cushman's Minneapolis office, in an interview.
The hunt for new tenants comes at a challenging time in the downtown commercial leasing marketplace as Minneapolis businesses such as Target Corp., Ernst & Young and Fredrickson & Byron are downsizing office space because of COVID-19 and modern computer trends that require less need for office filing systems.
Right now, there is a glut of office space available downtown. The newly renovated Dayton's Project office complex on Nicollet Mall and the City Center next door, where Target is giving up its office space, each have around 1 million square feet available.
At the same time, the $433 million RBC Gateway Tower is expected to complete construction early next year, bringing a Four Seasons Hotel and a host of fresh office options to the city.
Vacancy rates for all downtown Minneapolis offices rose from 23.6% to 24% between the first and second quarter of 2021, Cushman & Wakefield reported. With this summer's rebound in COVID infections, the future of the office marketplace remains uncertain.
Inside Two22, Fox Rothschildis considering reducing its four-story office space by half when its lease expires next year, Tufford said. The firm is exploring other lease options too.
"Obviously vacancy is increasing downtown but part of the reason for the renovation on Two22 was to really be able to meet the market with the best solution for employees to come back to work after the pandemic," Tufford said.
She added that companies searching for new space want upgrades and amenities found in higher quality buildings like the newly redone Two22.
"The hope is that companies believe in downtown and the amenities and the vibrancy that downtown has to offer and will continue to lease space there," she said. "We totally understand that a lot of companies are downsizing and that makes sense. My expectation is that in five years, most companies will be using real estate in much the same way they did in 2019."
Officials from Lingerfelt, the building's owner, echoed their confidence in the future of downtown.
"The renovations and updates truly exceed expectations from both a functional and aesthetic perspective, and we feel we've delivered an unrivaled destination for tenants and their employees, especially as we consider the post-pandemic environment," said Rob Valentine, a Lingerfelt vice president, in a statement. "We acquired Two22 with a full understanding of both Minneapolis' growth potential and history and what this building could offer the downtown community."