The office revolution has officially begun in the Twin Cities.

Thomson Reuters plans to sell the majority of its sprawling Eagan campus for smaller and more flexible work digs. The planned departure of a major employer from one of the largest office complexes in the metro is the latest sign of a more permanent shift to hybrid work that will likely play out for years.

"After conducting an extensive evaluation of our options — including numerous conversations with employees, stakeholders, and local officials to understand the impact of our decision and provide transparency — we are exploring opportunities to give employees a modern, collaborative office environment," Paul Fischer, president of Thomson Reuters Legal Professionals and co-site lead for the company's local campus, said in a statement.

The campus at 610 Opperman Drive near Dodd Road has primarily served as Thomson Reuters' headquarters for its legal products business. Before the pandemic, the Canadian business services and media conglomerate had about 5,000 employees working at the campus.

Of its 263 acres, 179 are up for sale, including the 1.1-million-square-foot office building and three data centers. The print manufacturing facility is not on the market and will continue to operate.

In the near-term, the Twin Cities office market is expected to see a lot of upheaval.

About 12.8% of office buildings in the Twin Cities are vacant, according to a year-end report from Colliers. That's up from 10.3% in the same quarter a year ago. During 2022, there were about 600 office lease transactions in the metro, down about half as many as the previous year.

"There's certainly going to be some distress in the office market," said Jeremy Jacobs, managing director of Colliers' Twin Cities office. The Colliers real estate services firm will assist Thomson Reuters with its search for new space and the sale of its current office.

Last year, leaders at Thomas Reuters began evaluating their office-space needs, knowing employees, who had grown accustomed to remote work during the pandemic, would want to split work time between the office and home. The company implemented its hybrid work policy last spring, asking employees be in the office a few times a week.

Based on employee feedback, executives want the new office to provide flexibility for a range of working styles, designating different areas for deep focus vs. team collaboration.

"Our current offices were designed to accommodate more people than we have on campus today, and as we have transitioned into hybrid working, we have excess space," said Tom Walrath, vice president of real estate and facilities for Thomson Reuters.

Thomson Reuters won't likely be the only employer to reconsider their traditional offices, Jacobs said.

"I just think every company has to be evaluating how much real estate space they need and what function they want that space to serve because, at least for the foreseeable future, the days of everyone going into the office and having a cubicle or an office ... are gone," Jacobs said.

While many companies will likely shrink their office footprints, "it doesn't mean that they are going to be able to get out of the business of having space at all," he said. But desired amenities and accommodations, like conference technology for connecting remote workers, will be necessary in office design, Jacobs said.

"Most people only want to come to the office if there's that opportunity to collaborate so the spaces that you need to do that become sort of essential versus a 'nice to have,'" he said.

For this year at least, office leasing activity is expected to improve as suburban deals outpace those in the central business districts in downtown Minneapolis and St. Paul.

Still, finding another office tenant to occupy or redevelop the Eagan property would be something of a coup for Thomson Reuters. The office vacancy rate for the Eagan submarket increased more than five times from the previous quarter, according to Colliers research.

The Thomson property is one of the biggest redevelopment offerings in the metro in recent years. In August, a joint venture that includes Plymouth-based Roers Cos. and Indianapolis-based Scannell Properties paid more than $20 million for the 75-acre Prudential office in Plymouth. The companies are planning a $300 million mixed-use project that focus on housing. It would include more than 1,000 units of apartments, but also retail, restaurants and medical offices.

Leaders at Thomson Reuters will start their search for a new office on the southeast metro, expanding as needed. The company has not decided whether it will buy an existing space or build a new one.

While Jacobs, of Colliers, expects an ongoing shrinkage of office space for the next three to five years, like many trends in real estate, the pendulum could swing back the other way. As the next wave of young workers enter the workforce, more people may wish to work in the office.

"Those people will be the ones to drive new demand," he said. "The next generation needs the networking, they need the connectivity, the institutional knowledge, the training that for most industries is really hard to pass down if you are not in the office together."