A lot has changed in the few years since UnitedHealthcare signed a full-building lease for an office property in greater Green Bay, Wisconsin, most important the company's need for space.
In response to increasingly flexible work schedules and fewer employees commuting to the office, the Minnesota-based insurance giant decided to list half its namesake building at 2020 Innovation Court, joining other major tenants across the United States that are still offloading millions of square feet of space as they try to adjust their national real estate footprints.
UnitedHealthcare is the nation’s largest private health insurer and largest employer of physicians, overseeing approximately 2,200 subsidiaries and this year ranking as the fourth-largest company by revenue throughout the country.
The company enlisted a team of NAI brokers to help market the space and is looking to land a tenant willing to take on 87,000 square feet in the De Pere, Wisconsin, building, leased in late 2021.
"Changes to American office culture, in addition to [COVID-19] and 'work at home' abilities have made this unused, basically new, prestigious office space available," NAI details in its marketing materials. The space across the two floors has "never been used or occupied," and has access to an on-site cafeteria, fitness center, training facility and other property amenities.
UnitedHealthcare took over the full building shortly after construction was completed, according to CoStar data. The 174,000-square-foot property — which was developed as a built-to-suit for the insurance company — was sold the following year to Saint Louis, Missouri-based investment firm ElmTree Funds for nearly $37 million, or about $212 per square foot.
The price at the time was roughly triple the regional per-square-foot average of about $67, underscoring the Green Bay area's appealing stability as other top-tier markets in the United States were plagued with worsening vacancy and demand woes.
Reduced Requirements
The company's sublease listing lands as large office tenants across the United States are aggressively shrinking their real estate footprints in response to changes still rippling out from the COVID-19 pandemic that began prompting nationwide shutdowns four years ago. The move also reflects how these tenants are adapting to a range of challenges, from the effects of flexible work policies to economic pressures including higher interest rates, by taking a close look at how much real estate they truly need and where.
Whether it is through sublease listings or deciding not to renew existing spaces, companies are economizing their real estate portfolios by signing smaller leases or getting rid of their space altogether. Tenants have collectively dumped nearly 62 million square feet over the past year, according to CoStar analysis, pushing the total amount of move-outs since March 2020 beyond 200 million square feet.
While down slightly from its pandemic peak, there is still more than 203 million square feet of sublease space sitting on the national office market, according to CoStar data, double the amount reported in 2019. More than half of what's currently available is already vacant, further underscoring tenants' eagerness to get rid of anything they no longer need or want.
For UnitedHealthcare, the move to shrink its real estate holdings coincides with the fallout from a cyberattack in February on a subsidiary that processes more than 40% of the nation’s medical claims. The crisis paralyzed the healthcare industry for weeks, and the insurance company is now facing increasing scrutiny among lawmakers for its size and power across the country's health system.
UnitedHealth leases or owns more than 19 million square feet around the world, according to CoStar data, about two-thirds of which is office space.
The company, which reported a $22 billion profit last year, did not immediately respond to CoStar News' emailed requests for comment.