The commercial real estate industry got off to a sizzling start in 2019 in the Minneapolis/St. Paul market. How hot have the first six months been? Vacancies are down. Rent is growing. And absorption levels are meeting projections.
That’s the good news from the bi-annual Compass Report released by Cushman & Wakefield.
According to this report, at the end of the second quarter of this year, the vacancy rate across office, industrial and retail properties in the Twin Cities market stood at 10.8 percent. That’s down just a bit from the 10.9 percent vacancy rate at the beginning of the year.
In the first half of the year, the industrial submarket in the Twin Cities market saw 1.42 million square feet of absorption. Office saw 557,600 square feet of absorption while retail rebounded from a negative 600,000 square feet of absorption in the second half of 2018, posting a relatively flat absorption number in the first half of this year.
New construction continued at a healthy pace, too, with 1.52 million square feet being built across all property types in the first half of 2019. An additional 1.5 million square feet of new commercial space is projected to be built in the Twin Cities market throughout the rest of 2019. If that holds up, the 2019 total for new commercial space deliveries would hit 3 million square feet. That’s a nice increase from the 2.1 million square feet delivered in 2018.
“The industrial market has remained a strength during this real estate development cycle, and in the first half of the year, we saw office and retail start to show their strength as well,” said Mike Ohmes, managing principal in the Minneapolis-St. paul office of Cushman & Wakefield.
Ohmes said that Cushman & Wakefield is predicting an even stronger second half of 2019, particularly in the retail and investment sectors.