Many Twin Cities physicians are operating branch clinics in multiple locations to meet patient needs. Often, these offices are going in areas typically used for retail projects.

Several significant leases were signed during 2004 in the medical office market, including Fairview Health Systems with a 149,000-sf sublease. Other significant transactions included the Orthopedic Group's partnership of 100,000 sf in the TRIA Orthopedic Center with Park Nicollet and University of Minnesota Physicians in Bloomington. Allina took over a 250,000-sf space in the former Sears Building in Minneapolis for its corporate headquarters and Gillette Children's Specialty Healthcare leased 18,000 sf in Burnsville on the Fairview Ridges campus.

Vacancy rates will continue to decline in throughout the Twin Cities as usable space becomes scarce. Due to the special needs of many medical professionals there is limited availability of properties to accommodate their needs. As a result, medical industry's steady development should produce expansion needs, according to Grubb & Ellis.