According to the Minnesota Department of Employment and Economic Development, Minnesota has outgained the U.S. in over-the-year job growth for four consecutive months, and is in the midst of a seven-year employment expansion. In the metro, solid hiring demand was partly overshadowed by the continuation of baby boomers retiring and an increase of parttime and low-wage positions as job vacancies increased 36.8% from one year ago.
Despite negative overall absorption in the third quarter 2017, and a 10-basis-point increase in vacancy from second quarter 2017, the mood surrounding the Minneapolis/St. Paul office market remains optimistic. The list of users with new space requirements is expanding, and larger tenants continue to drive deals.
Building renovations in the Minneapolis Central Business District (CBD) continued as landlords aim to deliver next-level amenities in an effort to draw creative users and tech firms. Fifth Street Towers completed a multi-million dollar renovation, including energy pods and a skyway-level bar, both new to the Minneapolis market. The $25 million Baker Center renovation has also paid dividends as total lease deals in excess of 170,000 square feet (sf) have been inked in 2017.
New speculative projects have broken ground in areas where limited availabilities and escalating rental rates have constrained expansion opportunities. In the Minneapolis CBD, United Properties broke ground on The Nordic, a mixed use project with 195,000 sf of office space in the North Loop. The Ovative Group will occupy 31,000 sf upon completion in first quarter 2019. The Ackerberg Group also began construction on the 185,000-sf MoZaic East project in the Uptown neighborhood of Minneapolis.
Source : Cushman & Wakefield