Minneapolis Office Market
|Average Asking Rate (Price/SF)||
|Vacancy Rate (%)||15.3%|
|Net Absorption (SF)||
The Minneapolis-St.Paul office market continued to exhibit signs of softening in the third quarter, noted by rising vacancy and negative net absorption of 343,676 square feet. This decline in occupancy brings market-wide vacancies to 15.3% up 30 basis points from the previous quarter. Average gross asking rents dipped slightly for the first time in 9 quarters. This modest decrease of $.13 per square foot resulted in an average direct gross rate of $29.77 per square foot metro-wide. The decline is due to a modest decrease in asking rates for Class B properties across the market. Gross class A asking rates continued to increase due in part to increasing tax and operating expenses. Class A asking rates stand at $35.75 across all markets and have increased 220 basis points since the third quarter of 2021, while overall asking rates saw a 70-basis point increase in the same timeframe. This growth is due to high priced new availabilities, strong demand for premium spaces and landlord efforts to hold pricing. Despite overall face rents holding strong, effective rents are under downward pressure as concessions packages remain strong.