Blue Cross and Blue Shield of Minnesota are vacating their headquarters in Eagan, the latest Twin Cities company to consolidate its real estate holdings as a result of the shift to hybrid work.
Earlier this week, UnitedHealth Group confirmed that it would not be renewing the lease on the main building of its corporate campus in Minnetonka. The entire Thomson Reuters campus, also in Eagan, is on the market as the information giant looks for smaller office space in the Twin Cities.
Corporate property moves could become more common as leases come up for renewal.
Offices hit a crucial national benchmark earlier this year: they are half as busy as they were before the pandemic, according to a survey by office security firm Kastle. About 13% of the nation’s space was up for rent or sale late last year, with researchers predicting property values could fall 39% from pre-pandemic levels.
The shift to hybrid work has already resulted in a smaller footprint for Blue Cross on its 25-acre site, as two buildings behind its headquarters at 3535 Blue Cross Road were previously left vacant, the insurer said.
“Since Blue Cross transitioned to a hybrid remote working model in November 2021, we have experienced low occupancy and occupancy of our current office space,” said Jim McManus, spokesman for the insurer. “We believe that by reducing our real estate footprint, the company can create a more collaborative, productive and enjoyable environment for on-site work times.”
The 443,000-square-foot headquarters was built in 1969, according to Dakota County property records.
“Companies are trying to discover the new normal. Unfortunately for office building and office campus owners, this means there will be some downsizing,” said Mike Salmen, general manager of the Houston-based office of Transwestern, a Minneapolis-based commercial real estate services company.
Salmen said developing new office designs and new ways of working for employers is a work in progress.
“As a city, we are preparing for necessary office space adjustments,” said Eagan City Manager Dianne Miller. “We understand that businesses at the regional, national and global levels are reassessing their needs.”
For example, she said the city is working on a plan to redevelop the 1.1-million-square-foot Thomson Reuters campus at 610 Opperman Drive and some private lots around Eagan Central Park.
She pointed to other successful projects such as the redevelopment of the Cedarville Mall into the Twin Cities Premium Outlet Mall, the former Lockheed Martin industrial site in Central Park Commons, and the old Northwest Airlines headquarters campus in Viking Lakes (with the Minnesota Vikings’ practice facilities). . .
Thomson Reuters and Blue Cross and Blue Shield of Minnesota are Eagan’s two largest employers.
Blue Cross and Blue Shield of Minnesota laid off about 80 employees in February as part of an ongoing review of their operations, but still have about 3,000 employees, McManus said.
Blue Cross does not own the headquarters. It sold the buildings on campus to New York-based WP Carey Inc in 2012.
At the end of last year, WP Carey, a public real estate investment trust, had a portfolio of 1,449 properties in 26 countries. According to the latest financial records, the company owns 3.7 million square feet of land in Minnesota.
This report includes reports from the New York Times.
