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Market Report

Minneapolis-St. Paul Office Investment Forecast

2020 Outlook

Minneapolis Remains Focus of Construction; More Investors Heading to Suburbs

Developers are concentrating on the major office hubs. Downtown Minneapolis dominates this year’s deliveries, led by a building for the city of Minneapolis and a headquarters for Thrivent Financial. Thrivent’s former tower will house Hennepin County workers and both the city and county will be vacating leased space, potentially raising vacancy in some buildings later this year. Minneapolis also has the largest project underway in the metro. The mixed-use RBC Gateway will provide 531,000 square feet of office space, a hotel and street-level retail. The tower is scheduled to open next year and is already roughly 90 percent leased. Class A vacancy holding in the 10 percent range metrowide is spurring speculative construction. The most significant of these developments is 10 West End in the I-394 Corridor. The 343,000-square-foot project will be finalized in 2021. In recent years, new inventory has been focused on the downtown cores and along the Interstate 494 and 394 corridors, resulting in single-digit vacancy in most suburban submarkets. This trend will continue into 2020 as less than 250,000 square feet is completed outside the dominant office hubs, and more than half of this space is medical office.

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