1M-SF Target Renewal a Boon for Minneapolis

Retail giant Target Corp.’s 1 million-square-foot lease renewal in Downtown Minneapolis would be a major deal in any kind of real estate market. But given the industry’s current malaise and the slumping economy, the news is especially encouraging–for the Minneapolis market and beyond. Target inked its renewal for headquarters space at Minneapolis’ 50-story City Center tower last week, committing to occupancy of 970,000 square feet through 2023, with options through 2038. The firm’s existing lease was due to expire in portions in 2013 and 2015. The retailer has had a presence in the tower since 1983, and houses 4,000 employees there. The renewal ends speculation that Target would seek to move its headquarters to a possible new building. Given the current state of the development market, that option became less tenable as of late. The firm–Downtown Minneapolis’ largest employer—was also thought to be considering expanding its operations in the city’s Brooklyn Park, where it owns some 350 acres and houses 1,500 employees. But in the end, the firm decided to remain in its current space at the Brookfield Properties-owned City Center. Considering the tumultuous state of the retail sector as of late, Target remains relatively healthy, with a reported $64.9 billion in revenue in its latest fiscal year, which ended in January. The firm is also a major driver of the Downtown Minneapolis market, where many vendors have located offices in order to be near the retailer, which operates some 1,700 stores across the nation. Now, that occupancy demand looks as though it will continue, a boon for the area’s property owners. The leasing market has been sluggish as of late, but there have been a handful of large-scale deals inked over the past several weeks. In early April, defense contractor Raytheon signed on to occupy 600,000 square feet of office space at a Dulles, Va., complex owned by Internet firm AOL. And in late March, law firm Hinshaw & Culbertson L.L.P. extended its lease for 153,000 square feet at 222 North LaSalle Street in Chicago, a property owned by Tishman Speyer.