For the most part, speculative development is unlikely in the Southwest submarket, where vacancy currently stands at 16.9%, or 18.9% with subleases. The slow market continues in the St. Paul suburbs, which reported negative net absorption of 29,000 sf, leading to vacancy of 10.1%.

The City of Oakdale made way for development of a 55-acre site in the northeast quadrant of I-94 and I-694 for Carlson Real Estate Co. to develop a 700,000-sf business center consisting of office/warehouse product as well as multi-story office and office condominiums. The strongest performing submarket so far this year has been the Northwest, reporting nearly 335,000 sf of positive net absorption. The end result is a direct vacancy factor of 13.1%, but this figure climbs to 14.7% with the addition of 480,000 sf of sublease space.

The Minneapolis/North submarket recorded negative absorption activity again, a loss of 151,000 sf of occupied space, with its overall vacancy rising to 10.1%. Absorption activity was just slightly better in the neighboring Airport/South of the River submarket with 3,500 sf of net activity, leaving the vacancy rate virtually unchanged at 12.1%.