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Twin Cities Office Market on 'Firmer Ground'

MINNEAPOLIS-Demand for office space is returning, but the Downtown markets continue to lag the suburban office markets, according to a report from United Properties.

By Jim McCartney | Updated on July 27, 2004

MINNEAPOLIS-The two Downtown office markets are still in the doldrums, both with vacancy rates above 20%, while the suburban office markets are picking up, according to a new market survey from Bloomington, MN-based United Properties. “The Twin Cities office market is on firmer ground today than at any time in the past three years,” says United Properties senior associate Bob Revoir.

Metro-wide average vacancy rates declined slightly to 18.3%, or 20.8% with sublease space. Class A rental rates for the overall Twin Cities office market are at an eight-year low, averaging $13.60 per sf, according to the report.

There was no new office construction in the Twin Cities office market in the first half of 2004, which has not happened in any six-month period since 1996, according to United Properties. The survey projects about 250,000 sf of new construction to come online the second half of the year. This will represent the lowest annual rate of new office construction since 1995 and 1996 when no new office development occurred.

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