Over the past year, the state has added 48,068 jobs, a gain of 1.7% compared to the national average of 1.5%. The Twin Cities economy, specifically, continues to churn as it has added over 200,000 jobs since the end of second quarter 2009, and the labor market continues to tighten as job vacancy postings have increased. According to the Minnesota Department of Employment and Economic Development, the Twin Cities had less than one unemployed persons for every one job vacancy as of April 2017.
The Twin Cities office market is back on an even keel. After struggling with negative absorption of 156,000 square feet (sf) in the first quarter of 2017, the metro rebounded with a stable 148,000 sf of positive absorption during the second quarter of the year and an overall vacancy rate that improved 40 basis points to 17.0%. For the optimists out there, the glass is half full in a market that has been adapting to changing workplace trends and companies that are using space more efficiently.
Creative asset renovations continue to be prevalent across the metro. What started in historic warehouse buildings in the Minneapolis CBD is now moving into product that was built in the 1960s, ‘70s, ‘80s or later. These asset upgrades are blurring the lines between Class A and Class B properties. Class B and B+ properties are starting to offer more typical “A” amenities with rooftop decks, fitness centers and conference facilities.
Owners are finding success with full speculative build-outs, and even staging spaces with furniture, to effectively market proof of concepts to prospective tenants. That same theme is evident in newly redeveloped product such as T3 and Baker Center, the owners of which invested in a fully furnished 50,000-sf spec suite. Leasing success generally improves once a project becomes 80% complete and tenants can see what the space will look like.
Source : Cushman & Wakefield