Best Buy now has fewer employees regularly commuting to its sprawling suburban Minneapolis campus. As a result, the retailer that's one of the region's biggest employers is testing whether it can offload a large portion of the space to another company.
The Richfield, Minnesota-based electronics retailer is starting to market more than a fifth of its 1.5 million-square-foot corporate headquarters. That's in response to declining attendance among its workforce as many of its employees have extended their pandemic-era habits of working from home.
The listing totals just shy of 313,000 square feet across six floors and, with help from CBRE, is looking to cater to prospective tenants that want move-in-ready space and access to a slew of amenities that haven't been enough to lure Best Buy's own workers back to the office.
As the region continues to grapple with record-high vacancies, some of the largest employers across the Minneapolis market are exacerbating the challenges with decisions that have gradually eroded their previously vast real estate stakes in the area. Along with Best Buy, fellow retailer Target has also offloaded large blocks of space over the past several years, most of which has been concentrated around the city's urban core.
Best Buy has owned and occupied the entirety of the ninja star-shaped campus at 7601 Penn Ave. South since it was developed in the early 2000s.
Neither Best Buy nor CBRE responded to CoStar News' requests for comment.
Pandemic impacts
The headquarters listing is the latest in a series of steps Best Buy has made as the company has tried to absorb the pandemic-related impacts that have now become permanently engrained in its day-to-day operations.
In late 2023 the company requested a property tax break on the campus with executives claiming it had lost some value as a result of work-from-home policies. In exchange for subsidies Best Buy received to help fund its construction, the retailer agreed to pay property taxes based on a valuation of no less than $118.5 million until the end of last year.
Arguing that declining values across Greater Minneapolis' office market, Best Buy looked to cut its own campus valuation by more than $37 million and argued that it is not worth nearly as much as it was before the pandemic sent office properties across the country into a downward spiral. The Richfield complex cost about $300 million to develop, including public subsidies that totaled just shy of $60 million.
Best Buy officials then said that figure had dropped to as little as $60 million.
"Our Richfield campus today is half vacant," Tracy Smith, Best Buy's vice president and tax counsel, previously told Richfield city officials. Many of its corporate employees commute to the company's office about three days per week, although some continue to work on a fully remote basis.
Up for grabs
While the days of major downsizing and move-outs appear to have retreated from their pandemic-era peaks, companies across the country continue to make changes to their corporate real estate portfolios to respond to how much space they need and where.
Tenants collectively handed back upward of 65 million square feet in 2024, boosting the total to more than 180 million square feet of move-outs since the start of 2020, according to CoStar data. What's more, if and when they restart leasing plans, those deals often amount to less space than they initially occupied.
That has meant markets such as Minneapolis have struggled to regain the momentum it needs to address record-high vacancies and stagnant demand.
Combined with residual impacts of the pandemic, civil unrest over the past several months has compounded those challenges, creating an environment of uncertainty that local stakeholders say is hardly appealing to tenants or buyers looking to invest in Minneapolis’ office market.
Yet Richfield, located a short drive south of downtown Minneapolis, could offer a more appealing alternative. Best Buy's headquarters are situated alongside some of the region's largest thoroughfares and has direct access to major retail outlets, including the famed Mall of America.
The campus itself includes perks such as a daycare facility, a fitness center, on-site dining options, and a panoply of indoor and outdoor lounge spaces, all of which could be enough for Best Buy to land one or more prospective neighbors.