Minneapolis Office Sees Asking Rates Increase 4.5% Year-Over-Year

08 Jan 2020

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MINNEAPOLIS – Jan. 8, 2020 – The Minneapolis office market saw 193,694-square-feet of positive net absorption during Q4 of 2019 according to a new report by CBRE, driving asking rates up to $15.59-per-square-foot in Q4, a 4.5% year-over-year increase from 2018.

“Today’s asking rates that have been growing steadily since 2016 are primarily a result of the increased demand for larger concessions packages and renovated office buildings that offer an abundance of modern amenities,” said CBRE’s Brandon Megal, senior vice president in Minneapolis. “Some of these amenities include a focus on sustainability, wellness-based design, collaboration and community. Office buildings that can meet these demands will continue to see increased deal velocity through 2020.”

In leasing tracked by CBRE, new leases outpaced renewals 18 to 9, with business services and technology accounting for 58% of overall leasing activity, followed by finance at 17% and legal and health care both at 8%.

The largest sale in Q4 was Sentinel Real Estate Corporation’s purchase of the 210,524-square-foot Xcel Energy Headquarters for $108 million in Minneapolis, followed by Crestlight Capital’s purchase of the 239,876-square-foot One MarketPointe for $47 million in Bloomington.

Other Q4 highlights of the report include:
• There is 1.037 million-square-feet of office space currently under construction throughout the Twin Cities.
• The overall vacancy rate increased slightly to 18.5% in Q4, a 50-basis point increase from Q3.
• More than half of all leasing activity occurred in the Minneapolis CBD (28%) and the 494 Corridor (24%), with the Suburban St. Paul submarket accounting for the largest single share at 33%.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2021 revenue). The company has more than 105,000 employees (excluding Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.