The winner of CoStar's 2023 Impact Award for top lease in Minneapolis/St. Paul is an outlier in a few different ways.
Both the tenant and the property involved are high profile. The deal involves a new headquarters for a publicly-traded company with international reach, Piper Sandler Cos., a 128-year-old investment bank and financial services firm that ranks as one of the biggest players in mergers and acquisitions in the U.S. The company will be moving from its long-standing space at a skyscraper in the center of downtown, the US Bancorp Center at 800 Nicollet Mall.
Piper Sandler's new corporate seat will be a 113,000-square-foot space at North Loop Green, a new mixed-use development at 350 N. Fifth St. in Minneapolis. The project by Houston-based real estate giant Hines is one of the biggest currently under construction in the Twin Cities. Once done, North Loop Green will include two structures, a 14-story building with 350,000 square feet of office space and a 34-story tower with 350 luxury residential units and 100 units categorized as hospitality. On the ground level, North Loop Green will have 17,000 square feet of retail space and a public plaza called The Green, a one-acre green space that will offer artistic, cultural and community events year-round.
The Piper Sandler agreement was also the only transaction in the Twin Cities' 20 biggest deals that was not an industrial lease, according to CoStar records.
As a national real estate class, office was thrown into crisis mode by the rise of remote work during the coronavirus pandemic and it continues to grapple with a persistent and perhaps permanent slackening of demand and soaring vacancy rates. North Loop Green is in the North Loop district, a hip neighborhood that is considered a part of the downtown Minneapolis office market, where an unprecedented 19.2% of the office stock is vacant. Of the buildings that are technically tenanted, only about 63.9% of downtown Minneapolis' pre-coronavirus employment base is coming to work in the office on a consistent basis, according to statistics released by the Downtown Council in late February 2023.
Many of the Impact Award judges alluded to downtown Minneapolis' straitened circumstances in their comments. The size of the firm, and its decision to stay in the city's core during uncertain times, made the deal especially significant.
As it happens, the location was a big part of the draw for Piper Sandler, according to nomination narrative provided by the team behind the deal. About 25% of Piper Sandler's 450 employees already live in the North Loop. The district is about one mile away from Piper Sandler's current location on Nicollet Mall, which means that North Loop Green will shorten an already brief commute on foot. And, unlike the center-most portions of downtown, North Loop's retail, dining and entertainment scene has come through the pandemic largely unscathed.
About the project: The North Loop Green development includes a 14-story, 360,000-square-foot building at 350 N. Fifth St. in Minneapolis, which will be attached via a skyway connection to a 34-story residential tower. Its anchor office tenant, Piper Sandler, signed a 15-year lease for the top four floors in an agreement that closed on Dec. 22, 2022. The company will receive unique signage rights as part of the deal. With Piper Sandler on board, the property is 40% pre-leased with over a year until completion. The developer, Hines, began construction on North Loop Green in November 2021. The development is scheduled to open in 2024. Piper Sandler plans to move into its new office there by summer of 2025.
What the judges said: "An office tenancy this large has gone against all of the trends since the impact of [the coronavirus pandemic]," said Jim Rock, a principal at Avison Young's Minneapolis office. "Many more tenancies similar to this will be needed to replace the exodus of companies from Minneapolis. Perhaps this will be a positive example that others will consider."
They made it happen: North Loop Green is being developed by Hines in partnership with the AFL-CIO Building Investment Trust of Washington, D.C. and Marquee Development of Chicago. During the lease deal with Piper Sandler, the landlord was represented by a team from the Minneapolis office of JLL that included Brent Robertson, Laura Farrell and Teig Hutchison. Two managing directors from Hines' Chicago office also played a part in cementing the deal, Robert Pfefferle and Trent Acuff. The tenant was represented by Tom Braman of Braman & Associates in Minneapolis.
