Vacancies in the Minneapolis-St. Paul office market continue to fall, largely because businesses here are doing so well, according to the third quarter office report from Marcus & Millichap Real Estate Services.
And that’s just the beginning of the good news from the company’s report. Marcus & Millichap’s most recent look at the Twin Cities’ office sector is filled with plenty of positive news.
According to the report, more than 26,300 jobs had been created in the Twin Cities in 2013 as of the third quarter of the year. That includes nearly 10,000 office-using positions. This, of course, is speeding up owner-occupied office construction.
Two of the Twin Cities’ largest private employers, Target and United Health Group, are now in the process of constructing office buildings. United Health Group, after moving from leased space of 312,500 square feet in Minnetonka in the fall of 2012 has two buildings totaling nearly 600,000 square feet now under construction in Eden Prairie. The buildings are part of a new 1.48-million-square-foot office campus.
Work has begun, too, on 650,000 square feet in two nine-floor towers on Target’s Northern Campus in Brooklyn Park. And other companies are joining the fun, too. CenterPoint Energyand Xcel Energy have all announced plans for new headquarters. Wells Fargo is expected to serve as the anchor for the 1.2-million-square-foot office portion of the Downtown East redevelopment project in Minneapolis.
This year, then, Marcus & Millichap expects office vacancies in the Twin Cities market to fall 130 basis points to 14.3 percent by the time the year ends. Last year in the market vacancy rose 50 basis points and finished the year at 15.6 percent.
At the same time, asking rents should jump 3 percent in 2013 to an average of $17.09 a square foot, Marcus & Millichap reported. That should bring rents well above pre-recession levels. Last year, asking rents increased 5.7 percent.