Thomson Reuters' hunt for a new home took more than a year after the Canadian business services and media conglomerate decided to downsize.

And in the end, the company only ended up moving four miles away, though it did cut about 800,000 square feet.

"We found the perfect solution for our needs and what employees are looking for," said Tom Walrath, vice president of global real estate and facilities. "We're very fortunate and we couldn't be happier."

The company said Thursday it signed a lease for 300,000 square feet of nearly new space at 2900 Ames Crossing Road in Eagan, adjacent to TCO Performance Center, the Minnesota Vikings' practice facility. It is also the address for Prime Therapeutics, which made its recently completed corporate campus available for sublease late last year.

Prime and Thomson are among several major companies in the Twin Cities trying to pare down, which is resulting in a reshuffling of the commercial real estate scene across the Twin Cities. Not long after Prime made its announcement, Thomson officially launched its search for a smaller space.

The official search for a new space began in December 2021, but long before that it was clear to Thomson that it had more space than it needed.

Walrath said the company was using only about 75% of the more than 1 million square feet of space the company built nearly three decades earlier. In January, the company hired a broker and listed 179 acres of its 263-acre campus, which is at 610 Opperman Drive in Eagan.

A recently adopted hybrid work strategy has guided Thomson's space needs, Walrath said. The strategy focuses on employee flexibility and requires that most employees be in the office two to three days a week. Some are fully remote.

Whether an employee is hybrid or not, none will have a dedicated work space. Instead, they'll sign up for a work station that's best suited to whatever kind of work they're doing that day.

"We needed to change the type of space to support employees for the kind of collaborative work they want to do while they're together," Walrath said. "We're providing employees with flexibility, but [also] the right work environment so they can come into the office and be productive and be collaborative. It's about recruiting and retaining employees."

For downsizing companies, it's a mover's market. Thomson considered 80 locations and toured 20.

The new five-story building, known as The Landing, is far more conducive to the hybrid-work model and will need little reconfiguring before the company moves in during the first quarter of next year. It has more conference rooms and more collaborative areas, Walrath said, including more meeting areas where people can work together. There's also a coffee shop, cafeteria and "town halls" for larger employee meetings.

"All desks will be agile so you will request and reserve a desk when you come in," he said.

Jeremy Jacobs, managing director and market leader for the Twin Cities office of Colliers, helped Thomson find its new offices and is also marketing its old one.

"Pre-pandemic, few existing options would have been available for a tenant of Thomson Reuters' size," he said. "Post-pandemic, tenants of virtually every size have compelling and competitive options available, especially if they are willing to consider multiple submarkets."

The deal is a big win for Eagan, which will retain one of its largest employers, but the new lease will consume just a fraction of the more than 21 million square feet of vacant office space throughout the Twin Cities metro that was available at the end of March, according to a first-quarter report from Colliers.

The report shows space continues to come to market faster than it's being absorbed. Colliers cites Voya, Calabrio and WeWork as examples of companies that have all vacated about 100,000 square feet in each of their buildings.

While downtown Minneapolis' Central Business District still accounts for an outsized portion of the overall negative absorption across the metro, there have been significant improvements in submarkets along the Interstate 494 corridor and outlying areas, according to the report. Negative absorption happens when companies give up space faster than they occupy it.

Thomson Reuters did not disclose its lease terms. Generally, though, rents on the best space have been on the rise across the metro, according to the Colliers report, while everything below that is declining.

This is evidence that the "flight to quality" trend is real, as building owners keep rents high enough to offset the expensive construction costs associated with the kinds of improvements tenants are requesting.

Jacobs said Thomson's campus, which includes three "world-class data centers," has received significant interest, especially for conversion to another use.

"The opportunity has several tailwinds," he said, "including an industrial vacancy rate of less than 3%, an acute housing shortage and the era of AI, which has placed an enormous spotlight on the need for more data center infrastructure across the U.S."