Thursday, October 2, 2025
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Twin Cities Apartment Market Enters Period of Recalibration

by Kristin Harlow

By Chris Collins, Marcus & Millichap The Minneapolis–St. Paul apartment market is currently experiencing a transformation, shaped by shifting economic conditions, changing demographics and evolving public policy. Having strong fundamentals in past multifamily housing development, the Twin Cities have entered a period of recalibration.  After years of record-breaking development numbers, the construction pipeline has slowed dramatically, while demand remains across the metro. Like many markets, the Twin Cities face affordability challenges, aging populations and regulatory uncertainty. A major factor of the current market is the sharp decrease in new apartment construction. Following a peak in multifamily housing permits of more than 15,000 in 2022, the Twin Cities saw a sharp decline to just 7,400 from April 2024 to March 2025. This steep reduction is largely driven by public policy such as rent control, operating costs and rising construction costs, which now average in the low to mid-$300,000 per unit, while the market value of newly built apartments hovers near $250,000.  As a result, many developers find it financially unfeasible to break ground on new projects without substantial public subsidies. The construction pipeline has declined by more than 50 percent from its peak, and the number of units under construction will …

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IndustrialMarket ReportsWashingtonWesternWestern Market Reports

Puget Sound Industrial Market Makes Modest Recovery Amid Macroeconomic Challenges

by John Nelson

— By Andrew Hitchcock of CBRE — The Puget Sound industrial market is showing signs of modest recovery through the first half of 2025. Tenants are increasingly seeking flexible leases, renewing in place and right-sizing operations, resulting in smaller or more cautious leasing commitments rather than long-term deals. Shifts in port activity have also affected leasing decisions, exacerbated by the raft of universal tariff announcements in April. While some submarkets have regained momentum after a slow start, demand across the region is still uneven, with lingering uncertainty keeping vacancy rates elevated. Submarkets demonstrating momentum include Tacoma, which recorded 308,153 square feet of positive net absorption in the second quarter, alongside notable third-party logistics provider (3PL) leasing activity. The Seattle Close-In area also saw vacancy decrease to 9.3 percent, driven by healthy tenant demand from companies like Evergreen Goodwill and South West Plumbing.  Conversely, Kent Valley faced challenges. The vacancy rate climbed to 8.4 percent due to significant speculative deliveries that outpaced absorption and traditional users downsizing. Port activity temporarily dampened demand, compounded by a 21.2 percent year-over-year drop in international imports in May. This reflects uncertainty surrounding future tariff rates. On the plus side, year-to-date container volumes remain above 2024 …

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Conference CoverageMarket ReportsMixed-UseRetailTexasTexas Market Reports

InterFace Panel: Houston Retail, Mixed-Use Developers Face All Manner of Barriers to Supply Growth

by Taylor Williams

Executing ground-up development for pure-play retail space — or retail product in mixed-use settings — in Houston is immensely challenging these days for a variety of reasons, despite the fact that the city has the underlying job and housing growth needed to justify a greater inventory of retail product. While all retail developers in Houston face similar headwinds in terms of costs of capital and construction materials/labor, as well as elevated tenant improvement (TI) costs and hefty required return thresholds from investors, it’s difficult to single out any one of those factors as most responsible for the dearth of new retail development. Some issues will be felt more acutely in some submarkets than others. Certain companies may have better connections and capital situations such that they can circumvent some of the uncontrollables. But no matter the combination of barrier-to-entry factors, the net result is the same: a market that cannot adequately supply retail product to meet demand. Editor’s note: InterFace Conference Group, a division of France Media Inc., produces networking and educational conferences for commercial real estate executives. To sign up for email announcements about specific events, visit www.interfaceconferencegroup.com/subscribe. At the annual InterFace Houston Retail & Mixed-Use conference that took place on Aug. …

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Market ReportsMixed-UseRestaurantRetailSoutheastSoutheast Market ReportsVirginia

Richmond’s Mixed-Use Boom Fuels the City’s Retail Market

by John Nelson

The Richmond retail market has maintained strong fundamentals as the city’s diverse economic base and solid residential growth continue to fuel a historically low vacancy rate.  Demand is very strong from a variety of uses, ranging from soft goods and restaurants to entertainment and personal services such as med spas and boutique fitness. The coffee segment, long dominated by Starbucks Coffee, has seen a number of new competitors enter the market. Dunkin’ has been on a strong growth cycle, and more recently Dutch Bros Coffee, Scooters Coffee, Foxtail Coffee and PJs Coffee have been actively looking for sites. 7 Brew has been particularly active, opening two new stores and filling their pipeline with additional sites.   However, the real story in Richmond is the number of mixed-use projects that are in the planning stages or have broken ground, with virtually all of them anchored by a grocery store.  In Chesterfield County, the first phase of development for Springline at District 60 is near completion. Located at the intersection of Midlothian Turnpike and Chippenham Parkway, work was recently completed on a new 150,000-square-foot office building anchored by Timmons Group, while the 298-unit apartment building, The James at Springline, is nearing completion. …

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IndustrialMarket ReportsMidwestMidwest Market ReportsMinnesota

Minneapolis-St. Paul Industrial Market Is Proving its Staying Power

by Kristin Harlow

By Joe Mahoney, Opus In today’s industrial landscape, where some U.S. metros are grappling with double-digit vacancies and an oversupply of speculative product, the Minneapolis-St. Paul metropolitan area continues to stand apart. With consistently strong fundamentals, measured development, disciplined absorption and diverse demand, the Twin Cities have historically avoided the peaks and valleys of fluctuating supply and demand that plague other cities. Looking at current data, during the first two quarters of 2025, industrial vacancies here hovered around 4 percent while the national average was 9.3 percent, according to CBRE. In fact, the Twin Cities have the fifth lowest industrial vacancy rate in the country.  Steadfast economics This stability is no accident. The Twin Cities of Minneapolis and St. Paul rank as the 13th largest industrial market in the country due to a number of factors. Among the most impactful, they have a robust corporate base that includes 17 Fortune 500 companies in industries ranging from manufacturing, technology, agriculture and healthcare to medtech, energy, retail and financial services. This diversity helps drive consistent demand. In addition, above-average wages that outpace inflation, below-average unemployment rates and above-average job growth, household resiliency and demographic stability together help make Minnesota a good place …

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Market ReportsTexasTexas Market Reports

Everything Is Bigger in Texas, So Why Isn’t Our Fiber Internet?

by Taylor Williams

By Eric Burtt, executive vice president, partner development, Blue Stream Fiber In Texas, we pride ourselves on doing everything big. From booming cities to iconic skylines, the state is a magnet for growth and innovation. But when it comes to one of the most essential modern residential amenities — high-speed internet — multifamily properties aren’t always living up to the Texas standard. Connectivity has shifted from being a “nice-to-have” feature to a core utility in today’s real estate market. Just like water and electricity, residents expect fast, reliable internet to be ready from the moment they move in. For property owners and developers, the expectation is no longer just a service decision; it’s a marketing and investment decision. Why Connectivity Matters More Than Ever Internet use is not coming to a halt anytime soon. According to the National Telecommunications & Information Administration, in 2023, 13 million more people  were online compared to just two years earlier. Today’s households download nearly 700 gigabytes (GBs) of data each month, and usage is still climbing. High-speed connectivity isn’t just about meeting tenant expectations. It’s also essential for protecting and growing property value. For owners and investors, properties with robust fiber connectivity lease faster, …

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Market ReportsOfficeWashingtonWesternWestern Market Reports

Growing Pains, Opportunities Ahead for Seattle’s Office Market

by John Nelson

— By Dan Dahl of Kidder Matthews — Seattle’s office market has proven more resilient than other cities in past downturns, with smaller declines and quicker recoveries. This cycle is different. Seattle has been hit harder and is recovering more slowly than the rest of the country. San Francisco often signals what’s to come, with the Emerald City trailing by about 12 months. AI-driven leasing activity in San Francisco is gaining momentum — signaling growth for Seattle — but the local market still faces headwinds.  Demand Softens as Tenants Downsize Demand for office space in Seattle remains weak. Most tenants with upcoming lease expirations are downsizing. Tech companies have historically driven office demand here, but now they are shedding space, laying off employees and working from home. Tenants have the leverage. Concessions like free rent, reduced rates and built-out spaces are abundant, providing the opportunity for tenants to pursue a flight to quality and upgrade to higher-end space. Investment Market Under Pressure The investment side is equally challenged. Owners with near-term loan expirations are often in a pinch. Their loan balances exceed current building values due to high vacancies, lower rental rates, elevated cap rates and higher interest rates. As a …

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IndustrialMarket ReportsTexasTexas Market Reports

InterFace Panel: Lenders’ Sentiments on Houston Industrial Market in 2025 Reflect Pendulum-Like Movement

by Taylor Williams

HOUSTON — In the span of eight months — a blip in the life cycles of most commercial real estate deals and projects — lenders in the Houston industrial space have gone from enthusiastic to tepid to back to borderline optimistic. This pendulum-like pattern that has reflected the vacillating appetites of capital providers to deploy funds is not unique to the Houston industrial market. At the start of the year, commercial lenders across a range of asset classes and markets expressed positive expectations for 2025. A new, pro-business presidential administration, the building on short-term interest rate cuts in late 2024, a widespread sense that it was simply time to get back into the game — all of these notions played into an ebullient outlook for commercial deal volume in the new year. Editor’s note: InterFace Conference Group, a division of France Media Inc., produces networking and educational conferences for commercial real estate executives. To sign up for email announcements about specific events, visit www.interfaceconferencegroup.com/subscribe. It would not last very long. Unconventional, sweeping policies implemented by the second Trump administration, including mass layoffs of federal employees and implementation of tariffs on major American trading partners, deeply rattled investors and capital providers. Even as the administration …

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Market ReportsOfficeSoutheastSoutheast Market ReportsVirginia

Conversions, Return to Office Movement Help Propel Richmond’s Office Market

by John Nelson

Richmond’s office market stands out as a resilient post-pandemic performer, with strong relocation activity, a notably low vacancy rate driven by steady return-to-office trends and dynamic development, including office-to-residential conversions that are reshaping both the office and retail landscapes. Relocations have outpaced renewals in 2025, accounting for 78 percent of leases signed so far this year — the highest ratio of new leases to renewals since before 2019. This marks an increase even over the past few years, which were already remarkably healthy.  Richmond’s overall leasing activity remains stable, escaping the post-pandemic decline that crippled many other markets. The region has also recorded positive absorption for four consecutive quarters, signaling steadily increasing demand following occupancy losses from 2021 through 2023.  Return-to-office initiatives have reignited space needs that have been put on hold for months, or even years. As a result, average daily employee attendance in downtown Richmond has risen from 2,200 in 2022 to more than 3,000 in 2025, according to Placer.ai data, analyzed by CBRE Research. While this still trails pre-COVID levels by about 43 percent, it reflects progress toward restoring a balanced office market. Class A and B properties have repeatedly shown positive net absorption when broken down …

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Market ReportsMidwestMidwest Market ReportsMultifamily

How to Design for Multifamily Growth in the Midwest

by Kristin Harlow

By Yanitza Brongers-Marrero, Moody Nolan Rent growth in cities across the Midwest is booming, encouraging developers and municipalities alike to ramp up investment in the region. As interest shifts away from coastal markets that became overbuilt during the pandemic, the Midwest’s stability and growth potential are coming into sharper focus.  Columbus, Ohio, is leading the charge with adding 30,348 new residents in the past year, a 1.4 percent growth rate that outpaces both the national (1 percent) and Midwest (0.6 percent) averages, according to the latest U.S. Census estimates. Projections suggest the region could gain another million residents by 2050, underscoring its long-term demand for housing.  Chicago, meanwhile, remains the Midwest’s economic engine. The metro area ranks third in the U.S. by GDP at $860 billion and saw a 4.6 percent year-over-year rent growth in June, according to CoStar. The city also added 22,164 residents from mid-2023 to mid-2024, marking the seventh-largest population gain in the U.S.  Together, these cities, along with Minneapolis, are shaping the next chapter of multifamily investment and housing innovation in the Midwest.  What are the major influences you’re seeing fuel the growth in demand for multifamily projects in the Midwest?  Being five years out from …

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