Amenities, not rankings, drive commercial leasing.
Office brokers, building managers and tenants have long followed the ABCs of commercial real estate, a subjective but helpful ranking to separate premier office towers from plain ones.
But the class system is breaking down as buildings that used to be lower ranked are being updated to the point where distinctions are getting blurred.
The changes have led at least one Twin Cities real estate services firm to create its own ranking system and have attracted clients to some renovated middle-of-the-road buildings.
“We don’t see tenants that say, ‘I want to be in a Class A building or I want to be in a Class B building,’ ” said Brent Erickson, an executive director in office leasing for the local offices of Cushman & Wakefield. “They would either say ‘I want to be along Nicollet Mall’ or ‘I want to be in the North Loop’ … and now what we are starting to see more often is tenants saying, ‘I want to be in a building that has these features.’ ”
Features that used to be reserved for landmark skyscrapers, like well-outfitted fitness centers and outdoor terraces, are now becoming common in remodeled buildings.
One of the most notable renovations of what many considered Class B space in the heart of downtown Minneapolis is the Baker Center, which had its grand reveal of its renovations this past summer. The complex now features a two-story lobby, new amenity floor and high-grade finishes.
Law firm Faegre Baker Daniels leased 85,000 square feet in the Baker Center to move its operations team from Wells Fargo Center, the biggest leasing deal downtown in the third quarter, according to a quarterly office market report by real estate company CBRE. Wells Fargo Center will still be the law firm’s primary location.