Minnesotans love the water, flocking to lakeside towns, resorts, cabins and second homes throughout the year. But how does proximity to lakes impact retail properties? According to the latest research from Colliers, retail properties located on lakefront property boast greater foot traffic and, not surprisingly, a bump in sales.
In its June 2025 Research Reveals report, Colliers said that lakefront retail properties outperform other retail spaces when it comes to asking rents and vacancy rates.
In its report, Colliers looked at retail properties in the Minneapolis-St. Paul metropolitan area, defining properties that are located within 600 feet of a shoreline as waterfront spaces.
Colliers, then, looked at almost 100 waterfront retail properties of more than 10,000 square feet in its inventory. This inventory accounts for 1.9 million square feet of retail real estate. This accounts for almost 2% of the total retail inventory in the Minneapolis-St. Paul metro area.
The results of Colliers’ research? The company found that waterfront retail properties boast the highest asking rental rates and lowest vacancy rates on the market. The reasons for this are not surprising: Waterfront retail offers scenery and views to their clients that other retailers can’t provide.
As of the end of the first quarter of 2025, the vacancy rate for waterfront retail properties stood at 1.9% in the Minneapolis-St. Paul metropolitan area. That is an all-time low, and is less than half of the market-wide retail vacancy rate of 5.6% as of the end of the first quarter.
Because the vacancy rate for this space is so low, retailers looking for waterfront property can expect to pay higher rents. Colliers said that the asking rate as of the end of the first quarter of this year for waterfront retail space stood at $23.18 a square foot. That is 23.8% more than the market average of $18.73 a square foot as of the end of the first quarter of this year.
But retail isn’t the only sector in which waterfront property is outperforming the market. In its Research Reveals report, Colliers also found that waterfront office outperforms other office space throughout the Minneapolis-St. Paul metropolitan market.
According to Colliers, waterfront office properties account for more than 3 million square feet of competitive office real estate in the Twin Cities area. In the Class-B end of the sector, 5.2% of the office inventory in the Minneapolis-St. Paul office sector sits on a waterfront.
Colliers only considered Class-B office properties in its report because there are not enough Class-A waterfront office properties in the Twin Cities area to be statistically significant. This means that Class-A office properties such as Normandale Lake Office Park, Centennial Lakes and the Lakeside Center have been excluded from Colliers’ report.
As of the end of the first quarter of 2025, the vacancy rate of Minneapolis-St. Paul waterfront Class-B office properties stood at 23.5%. That’s lower than the overall Class-B office space vacancy rate of 25.9% as of the end of the same quarter.
The asking rent for Class-B waterfront office properties came in at $31.64 a square foot as of the end of the first quarter of this year, up from an average of $29.41 a square foot for Class-B office space in the Twin Cities region overall. Class-B waterfront office properties are 7.6% higher on average than their non-waterfront-based competing spaces.
