More on the market for office space in Minneapolis

When you move your company to Minneapolis, you gain easy access to two cities at once: Minneapolis and St. Paul. The two municipalities are right next to each other and have grown together, but operate under separate governments. This can make it so that for some businesses, there can be an advantage in choosing one over the other, even though in some locations, the other city is just across the street. For most companies, however, the desirability of a particular building or lease offering will be the deciding factor in the border area.

Minneapolis History

The Minneapolis-St. Paul area has an interesting history that is not shared by most other areas. Though the residents of each city get along fine now, this wasn't always the case. Originally, there was an intense rivalry between the two, and this resulted in surprising crimes. For example, the two took to arresting each other's census takers in 1890, in a bid to keep each other from being able to report higher population figures. In 1923, an inter-city baseball game ended in violence. Then, in 1950, both cities competed for a Major League Baseball franchise, resulting in the construction of a large stadium in each jurisdiction. Several other instances of duplicate "trophy building" construction also took place throughout the Twin Cities' history.

Now, the rivalry has cooled from these levels, aided greatly by the arrival of two major league teams in 1961 who named themselves after the state of Minnesota instead of choosing one city over the other. Other, later teams included both Minneapolis and St. Paul in their names. This helped the residents think of each other as part of a larger group, and now, any rivalry is minor and friendly.

Minneapolis Today

Today's Minneapolis offers many benefits to residents, and this ensures the presence of a stable workforce. Fine art museums, multiple orchestras, playhouses and a culture festival appeal to those who prefer to see something other than one of the area's major league sports teams. It is the larger of the Twin Cities, and is the Hennepin County seat, while its sister St. Paul is the state capital. This positioning attracts many legal firms and providers of related services.

Demographically, the city is 63.8 percent white, while the overall area is at 70%. Diversity is steadily increasing - a trend that has been in progress for decades. Over 1/5 of the population is of German descent. Notably, there is a large LGBT population here, and the city is known for a strong music and performing arts scene. Underground and independent hip-hop and rap music are currently taking center stage, but the city was also the launching pad for Bob Dylan's and Prince's careers.

The presence of several large university campuses gives employers easy access to students and recent graduates. The University of Minnesota has over 50,000 students here, and the others also contribute greatly to the student population. Schools for the arts, technology, psychology, and chiropractic combine to create a workforce with a very diverse skill set.

An Overview of the Minneapolis Office Space for Lease Market

In the second quarter of 2018, four new construction projects combined to set a record for square footage under construction in the Minneapolis-St. Paul area. These projects will bring a total of over 633,000 square feet online when they are complete. This, however, is not lowering leasing rates due to the existence of other factors. Rates are instead holding steady at this time.

According to a Colliers report, companies looking to get tenant improvements as part of their leasing deals will find that they are harder to come by than they once were. While landlords are still fairly eager to make improvements for those who want large amounts of space, they are tightening up on these deals for those who want more-typical amounts. This is because tariffs on steel, aluminum, lumber, and other construction materials are raising costs. Now, tenant improvements are being offered instead of other enticements like free rental months, rather than along with them.

Minneapolis Office Space Submarkets of Interest

Minneapolis CBD - RBC Wealth Management, Inc. has signed a lease elsewhere for 310,000 square feet in a new development. This will free up the RBC Tower in the CBD, which will be the largest block of Class A space to become available in the district in decades. The new space will present a great opportunity for either a single large tenant or several smaller ones.

Despite the size of this move, most of the action is not taking place in the CBD. Unlike in recent years, the hottest areas are in the suburbs.

Notably, the Minneapolis CBD itself is subdivided into several separate neighborhoods, each of which offer something unique. Look for trendiness in the North Loop, skyscrapers in the main CBD, and a neighborly feel in the Northeast area.

Southwest - This is the second-largest of the Twin Cities' six office submarkets. It currently has a vacancy rate of 16.77 percent, and has seen 146,000 square feet of absorption up until the second quarter. No new construction projects here have been completed yet this year, but the 186,000 MoZaic East center is expected to be finished during the fourth quarter. This Uptown building will be the largest in that neighborhood when it is done. WeWork is expected to be an anchor tenant, with a lease for 53,000 square feet already planned.

The 494 Corridor - Lately, press coverage has been focusing on the 394 Corridor, which is the main artery connecting the wealthy western suburbs to the city, but in leasing, the real action is taking place along I-494. Here, Jostens has signed a new lease for 54,000 square feet, and Ascentis signed multiple new leases. Look here for a quickly-growing area that has not yet gotten the popular recognition it deserves.

If you're thinking of leasing in Minneapolis, St. Paul, or one of the suburbs, be sure to contact us. We work with companies looking for office space, and will be glad to help you get the best submarkets, buildings, and workforce access to meet your needs.