When US Bank moved out of the Meridian Crossings office development in Richfield, Minnesota, it left behind 340,000 square feet of now-vacant office space. And that move is one major reason for the rough second quarter experienced by the Minneapolis-St. Paul office sector.
In its second quarter Minneapolis-St. Paul Office Market trends report, Newmark reported that the local office market saw negative absorption of 498,187 square feet from April through the end of June. Much of that negative figure, of course, came from the space left behind by US Bank.
US Bank’s move, though, doesn’t account for all the Twin Cities’ office woes. Newmark reported that office leasing activity in the Minneapolis-St. Paul market slowed to 886,793 square feet during the second quarter. That is down significantly from an average of 1.6 million square feet a quarter during the previous five quarters.
The reason? Newmark said that most companies are reducing the amount of office space that they occupy. They are also making longer-term decisions by either committing to new office spaces or renewing leases for longer terms.
Newmark reported, too, that now that the North Loop Green mixed-use development is complete, there is no new office space under construction in the Twin Cities market.
But what about the future? Newmark predicts that office vacancy rates throughout the Twin Cities market are expected to continue to rise through 2028. Newmark forecasts that the local office vacancy rate will top out at more than 30% at this time.
