Smaller commercial office buildings in suburbs push through the pandemic to find prosperity

Americans are likely to see more "for rent" signs in the coming months as businesses hurt by the coronavirus pandemic abandon office space.

5 EYEWITNESS NEWS has reported big buildings in downtown Minneapolis and St. Paul are emptier these days as employees work from home. But if you look at commercial real estate in the suburbs it’s been a different story.

Denny Walsh owns FTK Properties. Most of his office buildings are in the northern suburbs.

"Currently we have about 10 office buildings and about 700 tenants," said Walsh. "All of our buildings are small tenant; very entrepreneurial-based businesses doing everything you can possibly imagine. From little one-room offices spending $130 a month with free Wi-Fi in the building to people spending $500, $800, $1,000 a month. And they constantly can move up and down for sizes."

James Grear is one of Walsh’s tenants in the Brookdale Tower, in Brooklyn Center. Grear owns Thrive Youth Services. They provide home and community-based services for individuals with mental health disabilities. Two years ago Grear had 4 employees, he now has 80.

"We’re growing so fast, we started in the basement and now we’re occupying half the 4th floor" said Grear. "I did somewhat feel like we were taking a chance during the pandemic, but the referrals keep coming, they’re not slowing down and we just decided just to move with it."

Walsh has found a niche with micro-offices. Plus, he’s willing to offer small business entrepreneurs flexible leases, reasonable rents and more space if they need to grow.

"And they sometimes are doing 2 or 3 different types of businesses," said Walsh. "But we’re here to give them a chance. I’m an entrepreneur, I started in one small office myself 35 years ago. And I think everybody needs a shot and I’m willing to help them out and do that here."

According to Walsh, the pandemic has impacted office building owners in different ways.

"Well as you look around it’s interesting. Because as you look at the downtowns and the big glass towers; nobody is there. But in the suburbs and in the small businesses, we’ve had an explosion of business out here. New businesses, businesses expanding."

James Grear is growing so fast he’s moving Thrive Youth Services again, this time to another FTK property in Golden Valley.

"Oh my God, you couldn’t have paid me to believe this would happen," he said. "No, never in a million years. I thought I’d have to knock down doors to be able to find clients. But I tell you once the phone starts ringing it has not stopped!"

Walsh believes when the economy gets going it will be kick-started by small businesses.

"Small tenant businesses, which are the bedrock of our country and of our business community, are flourishing and working," he said. "And because we have a good capitalist society, you can find the little niches that you can do it. The small businesses will move and be nimble and they’ll fill it and they’ll grow. And that’s what we see happening."

As for what’s going to happen in 2021? Denny Walsh is confident vacancy rates will remain solid for office building owners that focus on smaller businesses.

On the other hand, commercial real estate services firm Cushman & Wakefield predicts vacancy rates in larger buildings that rely on big companies will be high until the second half of 2021, when more people will be vaccinated and they feel safe returning to work.