Minneapolis Real Estate Market Report

Minneapolis Office Market

For the first time since the first quarter of 2022, absorption turned positive, totaling 199.987 SF—only the second instance of positive absorption since the third quarter of 2020. Vacancy stands at 19.7%, well above the eight-year average of 14.3%. Suburban office markets are demonstrating relative strength, recording 371,018 SF of positive absorption. These areas continue to outperform core urban markets, with suburban vacancy at 15.7%—notably lower than the 25.6% vacancy rate in the Minneapolis CBD and 29.5% in the St. Paul CBD. Despite rising vacancy, high-quality office space with proactive ownership remains scarce. A substantial number of landlords lack the capital to compete effectively for tenants through tenant improvement allowances or building upgrades. Others are hesitant to invest without a clear path to positive cash flow.

Minneapolis Industrial Market

2Q25 absorption tapered to 480,378 from nearly 1.0 MSF in 1Q25. Vacancy increased to 4.7% from 4.5% at 1Q25 and 4.8% at year-end 2024 due to construction deliveries of over 1.1 MSF. Rents continue to rise, limited new development and steady tenant demand. Asking rents climbed to $7.89/SF in the 2Q25, a 12.4% increase from 2Q24. Currently, over 1.1 MSF is under construction and over 1.6 MSF was delivered during the quarter. Positive activity is being driven by expansion among manufacturing tenants such as BioMADE, Legrand, and Graco