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Twin Cities Office Fortunes May Turn Corner

BLOOMINGTON, MN-Target and General Mills are in the market for more space, perhaps as much as 300,000 sf, as vacancy rates are expected to improve in every submarket except Downtown St. Paul.

By Jim McCartney | Updated on November 18, 2004

BLOOMINGTON, MN-Market conditions are improving for Twin Cities commercial office property owners, according to a new office market survey by Minnesota Chapter of the National Association of Industrial and Office Properties. Businesses such as Minneapolis-based Target Corp. and Golden Valley, MN-based General Mills Inc. are in the market for more office space, according to real estate executives who presented the market update here earlier this week.

Growing sectors include retail, food, health care, financial services and education, according to the market update. Over the past two years, property owners have faced a troubled market for office space that included high vacancy rates and tenants with the upper hand and numerous choices.

Vacancy rates continue to be high, but 2004, the office vacancy rate fell to 17.6% from 18.2% in 2003, according to the NAIOP update. That marked the first drop in vacancy rate in four years. Twin Cities businesses and other office users also absorbed some 281,500 sf in office space in 2004 — the opposite of what happened the previous two years.

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