Consumers in Minneapolis-St. Paul prefer smaller homes close to job centers these days. And this has helped boost at least a modest recovery in the retail sector in the Twin Cities’ inner-ring suburbs and core areas, according to a recent report from Marcus & Millichap Real Estate Investment Services.
In its second quarter market report, Marcus & Millichap points to the recent move of US Bancorp, which moved 1,600 workers from St. Paul to the Meridian Crossing office complex in Richfield, Minn. The move, Marcus & Millichap wrote, highlights what appears to be a new trend in the Twin Cities: Both large companies and the general population are moving back into the core area of the Twin Cities.
This means good news for the retail market in the Twin Cities. According to Marcus & Millichap, vacancy rates in this sector should drop 30 basis points to 8.9 percent throughout 2011. The vacancy rate in this sector fell 30 basis points last year, too.
Rents should increase slightly in the retail sector in 2011, too. According to the report, Twin Cities retail operators will raise asking rents 0.2 percent to $17.20 a square foot. Effective rents will rise, too, 0.8 percent to $14.77 a square foot. Concessions are expected to slip to 14.1 percent of asking rents.
