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MINNEAPOLIS—It's a broker's dream…a major corporate push for space in your locale. And indeed, that's what's taking place here, according to Chris Allen, regional director of analytics for GlobeSt.com Thought Leader Xceligent. And there's good news on top of good news as the multi-tenant numbers continue to solidify.

“The Twin Cities market has been generally strong in both the industrial and office markets,” says Allen. For instance, on the industrial side, vacancies have dropped from 9.5% to 9.2%, “with total absorption over that span of 2.1 million square feet.” Vacancy is tight enough to support an additional 2.1 million square feet of construction, fairly evenly split between single- (1.1 million square feet) and multi-tenant (just over 1 million square feet) use.

On the office side, the numbers have improved as well over the past three quarters with “positive absorption of 716,275 square feet and vacancy dropping slightly from 16.4% to 15.9%.”

But a new trend is shaping up, he reports, as major corporate users, including such names as Wells Fargo and Optum (part of UnitedHealth Group), opt for building their own facilities. In fact, Allen reports that Wells Fargo is putting up two towers totaling 1.1 million square feet adjacent to Vikings Stadium, while Optum is building four towers pacing out to 1.4 million square feet. Just over 1 million square feet of that project has delivered to date.

Smaller plays are also whittling away at the Minneapolis occupancy data. Nonprofit marrow-donor platform Be the Match, which currently occupies 137,000 multi-tenant square feet, will be consolidating at year's end in 240,000 feet it's built for itself.

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In all, there's nearly 2.6 million square feet of office space currently going up in the Twin Cities market, but as the chart reveals, the multi-tenant construction, at 293,770 square feet, while healthy, pales in comparison to the nearly 2.3 million square feet currently going up for single tenants. It should be noted that there's an additional 6.8 million square feet planned and proposed, giving further evidence to the strength of the market.

Why the trend? Efficiencies of consolidation are driving part of it, says Allen. A broker in Xceligent's local advisory board also explains other drivers, such as: “Control. They have ownership of the space; they can also draft favorable long-term leases for themselves before they sell off to investors; and finally, that eventual sale/leaseback will free up cash for use in other capital expenditures,” Allen explains.