Several years ago, in the depths of the "Great Recession," teams from CBRE in Minneapolis and CBRE Global Investors in Los Angeles embarked on a mission to create a new gold standard for Class A office buildings in the Twin Cities through the transformation of 333 South Seventh Street (formerly known as Accenture Tower), a 31-story, 627,000-square-foot office tower built in 1987 and located on the edge of the downtown Central Business District (CBD). The CBRE team, led by the marketing, leasing and property management professionals, began interviewing tenants to identify opportunities to strengthen and expand the services and amenities offered at 333 South Seventh Street. This process led to a number of significant opportunities to help tenants and create value for the CBRE Global Investors separate account client that owned the building.
But the interview process also confirmed the building's Achilles' heel: its lack of a direct skyway connection into the heart of downtown. Minneapolis skyways are second-story enclosed bridges that cross streets and connect one building to another, creating a warm, convenient way for pedestrians to move through the city, particularly during Minnesota's long winters. They are essential amenities that get serious attention from companies looking for office space. Unfortunately, 333 South Seventh Street's existing skyway route to the center of downtown was a long, circuitous, 15-minute journey around a parking ramp over several streets and through four buildings. A new, direct skyway, connecting to the Ameriprise headquarters building across the street, would solve the problem, once and for all.
But to accomplish this feat, CBRE would have to negotiate the purchase of a half city block of green space owned by a local developer who initially was not very motivated to sell. Then, in the summer of 2011, the CBRE Minneapolis team learned that things had changed and there was a viable opportunity to quietly purchase the land, so they brought their recommendations to CBRE Global Investors.
"CBRE's local professionals think like owners and understand the big picture," said Tony Ecker, Senior Director, CBRE Global Investors. "They know who is in the market and how to best position the asset to attract them. CBRE Global Investors' focus is to create value for our clients, and that's always front-of-mind for our property management and leasing teams as well." CBRE Global Investors liked the plan and presented it to its client. The result?
"We were able to negotiate an elegant solution to buy the land, build the new skyway and solve a major problem, all for a price that was extremely beneficial to 333 South Seventh Street's owner," said Mark McCary, CBRE's Vice President of Brokerage Services in Minneapolis. Coincidentally, one of the building's largest tenants had the option to terminate its lease on January 1, 2012, if a new skyway was not constructed. Through the integrated efforts of CBRE Asset Services, Brokerage, Project Management and Investment Management, the new skyway ribbon-cutting was held on December 30, 2011. Fittingly, the project came in under budget, with significant savings achieved by doing construction during the market downturn.
"The support from CBRE Global Investors has been monumental," said Robert Traeger, CBRE's General Manager at 333 South Seventh Street. "This was a collaborative effort. CBRE Global Investors knows that local professionals understand their market and listen to the tenants' needs, which is the driving force behind the strategic positioning for the building. When we present ideas to CBRE Global Investors, they have always had an open ear for them. CBRE Global Investors calculates the return on the proposed investment ideas, and if it makes sense, they'll give us the go-ahead to implement it."
In fact, over the past five years, CBRE and CBRE Global Investors have implemented $12 million of enhancements as part of this transformation. 333 South Seventh Street introduced Minneapolis' first free, full-service health club for the exclusive use of its tenants, opened a staffed, full-service conference center and introduced energy upgrades that resulted in achieving a LEED® Silver EB certification. The lobby, common areas, retail storefronts, restrooms, lighting and signage were all remodeled and upgraded to a new market-leading standard. And last, but not least, 333 South Seventh Street opened a new skyway that now delivers happy tenants into the core of the CBD in just two minutes.
As the new gold standard in the market, 333 South Seventh Street has seen an avalanche of increased prospect traffic—over 20 firms toured the building in 2012, and it enjoyed nearly 100 percent tenant retention through the improvement cycle.
"Today, the universal comment we hear is, ‘we would never have considered this building before the new skyway'," McCary noted. "We fully expect to lead the market in leasing velocity this year and achieve an elevated Class A status for this special building."
"We built a cohesive team of asset services, brokerage, project management and investment management professionals, all pulling on the oars in unison, to pull off a multiyear, multimillion-dollar capital investment that will pay dividends to our client. This is an example of how the CBRE platform allows an investor to tap into best practices in all of these individual competencies, resulting in an exceptional outcome."