Minneapolis-St. Paul Retail Investment Forecast
Market Availability is the Tightest in the Upper Midwest;
Residential Growth in Suburbs Cultivates Investment
Multifaceted momentum to drive vacancy below pre-pandemic mark. Metro fundamentals have improved substantially, and the enhancement has been widespread. Last year, 13 of the 17 largest submarkets posted vacancy declines. Of that grouping, more than half of the locations registered moderations in availability, exceeding 50 basis points. Marketwide, multi-tenant vacancy realigned with the 2019 measure and single-tenant availability approached the 3 percent threshold. A scant pipeline will reduce pressure from new supply and allow headway to carry into this year. Expected completions in 2022 will bring the running two-year total to 525,000 square feet added, an inventory expansion smaller than 0.5 percent. As such, many retailers are opting to lease existing spaces, exemplified by a 133,000-square-foot planned move-in by Schneiderman's Furniture in June at a former Sears near Coon Rapids. Tenants' willingness to backfill vacant space contributes to Minneapolis-St. Paul's stake as the tightest market in the region. The year-end vacancy rate is projected to be at least 100 basis points below Milwaukee and more than 200 basis points under Chicago and Detroit.