Local Office Market Continues to Improve in Q3

The Twin Cities office market experienced positive absorption for the second quarter in a row, after previously seeing six consecutive quarters of negative absorption.

The local office real estate market is continuing to improve after posting positive absorption for the second quarter in a row, according to a third-quarter report released recently by the Minneapolis office of Cassidy Turley.

The office market saw a positive absorption of 191,099 square feet in the third quarter, which lowered the overall metro vacancy slightly to 20.2 percent.

Class A buildings led the way in the third quarter with 275,540 square feet of absorption, lowering vacancy from 17.5 percent to 16.6 percent. In terms of location, the Southwest fared the best with 115,281 square feet of positive absorption, bringing vacancy down to 21.6 percent from 22.4 percent last quarter.

The largest contributor to the third-quarter absorption was U.S. Bank's move into Meridian Crossings, occupying 88 percent of the complex, which translates to 340,000 square feet of office space.

The Twin Cities' retail market remained relatively flat with negative absorption of 30,453 square feet and vacancy rising slightly from 7.8 percent to 7.9 percent.

The report noted that investment sales for retail properties are starting to make a return to the market. For example, Alatus, LLC, purchased Block E in downtown Minneapolis, and Shannon Square Shoppes and the adjacent Cub Foods were sold from Inland Real Estate in the third quarter.

The industrial market, which has traditionally fared better than the office and retail markets, saw a negative 153,488 square feet of space absorbed in the third quarter. Vacancy rose from 13.1 percent to 13.2 percent.

Founded in 1909, Cassidy Turley is the oldest commercial real estate service provider in Minnesota. It provides appraisal, brokerage, consulting, and property and asset management services.