Onward Investors’ recent purchase of the Ameriprise Financial Center in downtown Minneapolis highlights the challenges that the office sector faces across the country.
Why? The 31-story office tower at 707 2nd Ave. South sold in 2016 for $200 million. Onward Investors purchased the same property for just $6.25 million earlier this year, according to the Minneapolis-St. Paul Business Journal.
And, yes, that does represent a price drop of 97%.
This isn’t overly surprising, though. The office market in Minneapolis and across the country has been struggling since the COVID pandemic hit. Today, companies are leasing smaller amounts of office space as most continue to embrace the hybrid work model.
While some larger companies are requiring their workers to return to the office five days a week, most mid-size and smaller firms are still allowing them to split time both at home and in the office.
Ameriprise will leave the 960,000-square-foot building and consolidate its downtown Minneapolis offices into a single building at 901 3rd Ave. S, property that it already owns.
In a statement sent by Onward Investors, the company says that it is exploring several options for the office tower. Onward Investors said that it this includes the possibility of converting some or all of the office tower to alternative uses.
This, too, isn’t surprising. Many owners are converting outdated office space to other uses, often multifamily. This isn’t a cure-all for the struggling office market, though. Conversion requires finding the perfect building on the ideal site. Not all office properties are good candidates.
“The purchase of the Ameriprise Financial Center is another demonstration of our desire to be an active participant in the recovery of downtown Minneapolis,” said Jon Lanners, partner at Onward Investors, in a written statement. “We believe that now is a great time to be investing in the city’s future and look forward to engaging a multitude of stakeholders in the coming months as we re-imagine this well-known asset in the Minneapolis skyline.”
