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Flight-To-Quality Hits Twin Cities

MINNEAPOLIS-As lease rates subside, class A properties are seeing steady demand as tenant upgrade their space from lower quality assets, according to a new report from Northstar Partners.

By Jim McCartney | Updated on September 01, 2004

MINNEAPOLIS-A flight-to-quality trend seems to have emerged in the Twin Cities market as tenants are seeking opportunities to upgrade their space without dramatically increasing their real estate costs, a recent market study concludes. Class A properties in the Twin Cities are experiencing steady demand while there has been a decline in class B and class C occupancy, resulting in minimal net absorption marketwide, according to a report from Northstar Partners, the Twin Cities affiliate of Cushman & Wakefield.

Since the first quarter of 2003, more than 860,000 sf of class A space has been absorbed. Class B and class C properties experienced 536,000 sf of negative absorption during that time.

The overall vacancy rate for all classes of space is currently 20.6%, including 1.4 million sf of sublease space. The amount of listed sublease space increased 190,000 sf during the second quarter, but it is down 19% from this time last year.

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