Once upon a time, developers were racing to build office towers. Now, brokers are working over time to maximize tenant occupancy for profit-minded owners trying to avoid the distress that has plagued much of the commercial real estate industry.
The Minneapolis office market has seen its share of foreclosures and deeds in lieu in the depths of the bust—and the ripple effect is still being felt. In January, Fifth Street Towers, a 1.1-million-square-foot office complex in Downtown Minneapolis, went back to the lender via deed in lieu.
The distress sparked a shift toward a value-add approach that aims to drive lease renewals and attract new tenants in the highly competitive Twin Cities market. Accenture Tower, a 621,193-square-foot office tower in the heart of Minneapolis, is perhaps the best example of how good facilities management can maximize tenant occupancy and, therefore, owner profitability.
“We’ve lost only two tenants in the past five years,” says Jim Kenny, a vice president at CBRE and a member of the Accenture Tower leasing team. “One downsized and the other was a victim of the economy. But ownership understood where the project was in its property lifecycle and decided to make changes to reposition this 1987 building.”
Accenture Tower rises 31 stories and offers an underground, four-level parking garage. The tower is connected via a skyway to the 701 Building and the Campbell Mithun Tower. The class A facility was built with all the modern office trappings tenants could expect, from a bank and a dentist office to a shipping center and a car wash. Restaurants and retail also call Accenture Tower home.
But after more than 20 years in the market, CSDV-MN LP (an entity set up by CalSTRS as owner of the building), decided it was time to modernize the asset with a mind toward maximizing tenant occupancy and profitability. While some building owners were handing back the title deeds to lenders, CSDV-MN was racking up millions of dollars in contractor assignments to position its building for growth...
...For the rest of the story, please visit the Better Buildings supplement in the February/March 2012 issue of Real Estate Forum.
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