Despite the multitude of signs reading "space available" plastered across suburban office parks in the Twin Cities, the level of optimism is rising when it comes to commercial real estate in the Twin Cities, particularly in the suburbs.
"I am optimistic moving forward," said Scott Tankenoff, a Managing Partner with Hillcrest Development. "The challenge for commercial real estate ownership and people in the field, it can be a herd mentality. We can't make decisions based on months. We need to think about this in periods of years."
Hillcrest Development purchases, redevelops, and operates commercial real estate properties all across the Twin Cities. One of those properties is Pentagon Park in Edina, where the pandemic has made a direct impact.
"There's certainly a lot fewer people at Pentagon Park that have office space that are actually utilizing their office space to the same extent," he said. "There's a number of companies where they're working a partial, or alternate shift and have different COVID-19 safety protocols. We've seen that it's had a negative impact on what's going on."
From his viewpoint, Tankenhoff says many companies are stuck in the "what's next" decision making process.
"A lot of their employees aren't sure what to do, or very much prefer being able to be remote and have that flexibility."
Even before the pandemic companies were pushing to update their office settings to include a number of on and off campus amenities. Tankehoff says the appeal for businesses in the suburbs is that they can offer quick access to trails, restaurants, breweries, and many more outlets to attract employees.
"It's not just that you can give them a good looking space, building, or parking," he said. "We have to be able to provide companies things that their customers, clients, and employees want. Without good amenities, good location, and an inability to be nimble, it's just not going to be relevant."
Occupancy across at Pentagon Park is the upper 70 to lower 80 percent mark. Most of the prospects have been small, to medium sized companies, which has been a positive for developers.
"Small to medium-sized companies, especially entrepreneurial companies, are being for more aggressive and far more decisive with their real estate and facility decisions as they try to attract and retain talent," Tankenhoff said. "Larger companies that employ a lot more people are making far less decisions. I think they're worried about employees looking for other employment if they're forced to come back into the office."
Hillcrest Management does not have properties in downtown Minneapolis or downtown St. Paul but remains vested in the ongoing conversation when it comes to business and public safety.
"Places like Edina or even Northeast Minneapolis have turned out to be marvelous locations for companies that want to be close to downtown, but don't necessarily want to deal with what's going on in downtown right now."
Despite not having an immediate business interest in either city's downtown, Tankehoff says it's imperative that both areas thrive for the state.
"From a tax and revenue, employment, and societal standpoint," he said. "We have a Twin Cities and state where there's difference and diversity, rural and urban, and the diversity is very good for us as people. We can't just say 'We don't want to be there.' There needs to be an emotional and physical reinvestment into what's going on in our downtowns."