Minneapolis, MN – April 15, 2019 – The Minneapolis office market saw asking rates increase to $15.30, which is 15.9% above the 10-year average as demand remains high, according to a new report by CBRE.
Leasing activity remains strong in Minneapolis, with a 31.3 percent increase in leasing activity during Q1 of 2019. However, the market experienced 279,015 square feet in negative net absorption and the overall vacancy rate increased slightly to 18.3 percent. A number of large tenants contracting their real estate was the major factor in the increased vacancy and negative absorption, but increasing leasing demand indicates the rest of 2019 should have positive net absorption.
“Class A vacancy rates were lower than the other classes at 14 percent and the asking rates are 15.9 percent above the 10-year average, signifying the high demand,” said Jim Freytag, senior vice president with CBRE. “While vacancy rates did increase overall, leasing demand continues to surge, especially for Class A space.”
Continuing the trend from recent quarters, the majority of leases were new rather than renewals, with the Minneapolis CBD accounting for 32 percent of overall leasing activity, followed by the submarkets of I-394 at 20 percent and I-494 at 17 percent. Class A demand also continues to rise, as tenants continue to seek higher quality properties and amenities.
The two largest sales were recorded in Minneapolis CBD, with Japan-based Sumitomo Corporation purchasing the 650,000 square foot SPS Tower and DRA Advisors purchasing the 622,173 square foot Oracle and International Centre. The remaining sales activity occurred in suburban submarkets.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2018 revenue). The company has more than 90,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 480 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
