The three-year trend of rising vacancies in the Minneapolis-St. Paul office market should come to an end in 2011.
At least that’s the good news being predicted by the research division of Marcus & Millichap Real Estate Investment Services.
According to the company’s latest office report, vacancy rates in the Minneapolis-St. Paul market will drop 40 basis points during 2011. This will leave the office market with a vacancy rate of 19.4 percent.
That’s an improvement over last year, when the region’s office vacancy rate rose 30 basis points.
Part of the reason for the drop in vacancies is a lack of new construction in the office sector. According to the Marcus & Millichap report, developers will complete just 30,000 square feet of competitive office space this year in the Twin Cities area. That’s down from a far larger 330,000 square feet in 2010.
Building owners shouldn’t expect much relief when it comes to rents, though. Asking rents should actually dip this year by 0.2 percent to $21.51 a square foot. Effective rents — the rents that building owners actually do charge — will rise a bit, 0.9 percent, this year to reach $16.59 a square foot.
