The Twin Cities multi-tenant commercial real estate market exceeded expectations in the first half of 2018, outpacing projected absorption by about 20 percent even as the retail and office sectors slowed significantly. At the end of June, the market’s multitenant properties had a measured vacancy rate of 10.6 percent, 20 basis points lower than six months ago.
A total of 1.8 million square feet (sf) was absorbed across office, industrial and retail properties in the first half of 2018, a positive sign for a market contending with the ongoing “right-sizing” trend in the office market and the long list of national retailers giving back large spaces due to bankruptcy or structural changes. That number is down from 2.3 million sf of absorption in the second half of 2017. As in prior reporting cycles, the industrial property type continued to provide most of the absorption on record, totaling 1.6 million sf over the last six months.
New construction of multi-tenant properties continues to bull forward, with 2.3 million square feet due for delivery by the end of the year. That number on its own would nearly match 2017’s total for the year and bring 2018’s total to just about 3 msf.
The July 2018 Compass report, which provides in-depth analysis of commercial real estate conditions in the Minneapolis-St. Paul metro area, is now available online. Download the Executive Summary or visit the website for detailed market research.