Minneapolis Real Estate Market Report

Minneapolis Office Market

The 31-story Ameriprise Financial Center in the Minneapolis CBD sold for $6.25 million—a staggering 97% discount from its $200 million sale in 2016. The previous owners were impacted by Ameriprise consolidating its workforce into its nearby Service Center, coupled with the significant capital investment needed to modernize and build out space to meet current tenant expectations. New owner Onward Investors is evaluating potential conversion options, including residential redevelopment. In the Minneapolis CBD, Two22 has been taken over by lender Oaktree Capital Management via deed-in-lieu of foreclosure. The 727,000 SF tower is now under their ownership. At Normandale Lake Office Park, distress continues to surface. The owner of the 8400 Tower is now facing foreclosure following a loan default. This follows recent distress at the 8500 Tower, which sold at foreclosure in September 2024, and the 8200 Tower, which was placed in receivership earlier that spring.

Minneapolis Industrial Market

First-quarter 2025 absorption was strong at nearly 1.0 MSF, following 3.2 MSF of total absorption in 2024. Vacancy declined to 4.9% from 5.2% at year-end 2024. Despite elevated interest rates, property values have remained stable; however, extended sale timelines are beginning to put downward pressure on pricing. Rents continue to rise, driven by falling vacancy, limited new development and steady tenant demand. Asking rents climbed to $9.20/SF in the first quarter of 2025—a 7.5% increase from year-end 2023. This builds on annual gains of 9.2% in 2023 and 8.6% in 2022. Since 2020, industrial rents have risen 32.9%, with additional growth anticipated. Construction activity remains constrained. After peaking at 9.1 MSF in 2023, it fell 45.9% to 4.9 MSF in 2024 and continues to slow. Just 389,821 SF was delivered in the first quarter of 2025, with fewer than 3.0 MSF currently under construction.