Here’s some good news about the Minneapolis-St. Paul office market. The region saw positive absorption in its office sector in the first quarter of 2025. This marks the first time this has happened since the first quarter of 2022.
According to Newmark’s first quarter Minneapolis-St. Paul office report, the Twin Cities market saw 48,739 square feet of positive office absorption during the first three months of 2025. That is only the second time the market has seen positive office absorption since the third quarter of 2020.
While that is good news, the Twin Cities office sector still faces challenges. Newmark reported that the overall office vacancy rate in the Minneapolis-St. Paul market remains high at 24.3%. That is well above this market’s eight-year average of 17.9%.
As in many major metropolitan areas, the suburbs are outperforming the more urban areas of the Twin Cities market. According to Newmark’s report, suburban office markets in the Minneapolis-St. Paul area recorded 220,855 square feet of positive absorption in the first quarter.
At the same time, the overall vacancy rate for the suburban office market stood at 19.6% as of the end of the first quarter. That is significantly lower than Newmark’s reported 29.3% vacancy rate for the Minneapolis CBD’s office market or the 33.4% vacancy rate in the St. Paul CBD during the first quarter.
The amount of new office construction continues to be down throughout the Minneapolis-St. Paul market. However, Newmark did point out one major office development project now under construction. Orion Investments began construction on The Craftsman on France, a 136,000-square-foot office project expected to be delivered in Edina, Minnesota, by the summer of 2026.
Charles Schwab Corp. has signed a lease for 12,000 square feet in this property, while Adolfson & Peterson will occupy 41,195 square feet. The project also includes a 150-unit multifamily component.
