Market Reports

Influx of Supply Begins to Impact Minneapolis Multifamily Market

by Kristin Harlow September 20, 2018

Like several other markets across the country, the Twin Cities is experiencing the peak of the post-recession construction cycle. However, the traditionally tight multifamily market is in one of the best positions to absorb new units. In fact, Minneapolis-St. Paul has consistently reported one of the lowest vacancy rates in the nation due to a strong economic base and pent up demand for new units. Metro Minneapolis is the second-largest economic center in the Midwest and the local economy has grown at an average of 3 percent over the past five years, a healthy rate in the Midwest. The 18 Fortune 500 companies headquartered in the area are a significant driver of job growth and rental demand, along with the hundreds of support firms. As a result, the unemployment rate is below 3 percent and among the lowest in the nation. Despite a lack of available talent, employers managed to create 30,600 jobs in the year-long period ending in the second quarter. Overall, payrolls expanded by 1.5 percent during that time. Employment growth is encouraging development across several sectors in the market. In South Minneapolis, construction along the Blue Line is taking shape as $300 million in projects are coming …

September 20, 2018

Market Reports Midwest Midwest Market Reports Minnesota Multifamily Seniors Housing

Future Is Bright for Senior Living Development in the Twin Cities

by Kristin Harlow March 29, 2018

Exciting times are in store for the senior living industry. A massive generation of baby boomers is entering the golden years of retirement and beyond, driving a wave of demand for seniors housing. The U.S. Census Bureau estimates 78 million baby boomers were born between 1946 and 1964. The youngest boomers are 54 this year and the oldest are 72, so we are just eclipsing the front end of the wave. In 2029, just 11 years from now, all baby boomers will be at least 65 years old, with the vast majority beyond age 65. This group will represent 20 percent of the U.S. population, and that is when the wave may start to resemble a tsunami. Strength in numbers Demographers agree that circumstances are favorable for growth in the seniors housing market, and the real estate industry is responding. In the Twin Cities, market conditions are balanced with an adequate supply of seniors housing to handle the first groups of seniors moving in. At this time, we observe that the greatest demand is for independent living versus assisted living, memory care or skilled nursing. Overbuilding has not been an issue in the Twin Cities and most of the Midwest …

March 29, 2018

Market Reports Midwest Midwest Market Reports Minnesota Retail

From Pop-Up Shops to Escape Rooms, Minneapolis Embraces Experiential Retail

by Kristin Harlow March 22, 2018

The retail sector in metro Minneapolis continues to adapt to changing consumer preferences, fast-moving economic opportunities and new state laws. Over the course of 2017, the retail real estate market showed positive growth in every category. Absorption of 1.4 million square feet surpassed the 1.3 million square feet of deliveries, according to CoStar Group. The rising cost of construction, low vacancy rate (3.1 percent) and increasing rental rates are creating new barriers to entry for retail businesses. The aforementioned factors, along with a newfound confidence in the rising economy, are causing landlords of all magnitude to become more selective with the quality of tenants they accept. Landlords will continue to become more reserved with regard to the tenant allowances they provide for new tenants. We have seen retail giants such as Walmart and Target add new services that emphasize both value and convenience and bring shoppers back for quick fill-in trips. Minneapolis-based Target Corp. announced the public rollout of its Target Restock program, a next-day delivery service for household essentials that is designed to compete with Amazon’s Prime Pantry. After being beta-tested by its employees, the program is currently only available in about nine markets, but plans are to slowly …

March 22, 2018

Market Reports Midwest Midwest Market Reports Minnesota Retail

Minneapolis Market Ready to Embrace Shifting Retail Trends

by Kristin Harlow October 12, 2017

The Minneapolis retail market ended the second quarter with a vacancy rate of 3.1 percent. The freestanding retail segment (buildings not contained within a shopping center) posted a vacancy rate of 1.8 percent. Over the past year, there has been a pattern of positive absorption in the market. The average quoted asking retail rental rate at the end of the second quarter was $13.94 per square foot. Comparably, a year ago this rate was $13.29 per square foot. Meanwhile, construction of retail properties has been on an upward climb. Within the past four quarters, 1.2 million square feet of retail space has been built, and there is an additional 892,910 square feet in progress, according to CoStar Group. Net absorption continues Retail net absorption was moderate in Minneapolis in the second quarter of 2017, totaling 484,120 square feet. That’s up from 135,536 square feet of positive absorption in the first quarter and 366,652 square feet in the fourth quarter of 2016. However, these figures are all down from the third quarter of 2016, when 638,183 square feet were positively absorbed in the market. Several tenants have moved out of large blocks of space in 2017. For example, Sears vacated 125,209 …

October 12, 2017

Market Reports Midwest Midwest Market Reports Minnesota Multifamily

Stars Are Aligned for Twin Cities’ Apartment Market to Remain Strong

by Kristin Harlow March 23, 2017

Following the recession, demand for multifamily development took off in many areas of the country. We predicted it as significant economic and demographic changes were happening, spurring a shift from homeownership to renting. As a result, the multifamily sector experienced a resurgence that hadn’t been seen in decades. In some cities where an abundance of multifamily projects have been delivered, there is discussion of potential saturation. That’s not the case in the Twin Cities of Minneapolis and St. Paul, where demand for multifamily developments remains strong and the vacancy rate is an extremely low 2.6 percent. Based on data from the U.S. Census Bureau, at the end of 2016 the vacancy rate in the Twin Cities compared quite favorably with other metropolitan areas such as San Antonio, Texas (13.6 percent); Tampa, Fla., (11.6 percent); and Tulsa, Okla. (10.2 percent). Keep in mind that a 5 percent vacancy rate is considered to be a stabilized market. Healthy job growth Several economic factors continue to drive apartment demand in the Twin Cities, including job growth, low unemployment and a strong base for business expansion. Minnesota ranks third in the nation for number of Fortune 500 companies per capita. Prominent corporations with headquarters …

March 23, 2017

Market Reports Midwest Midwest Market Reports Minnesota Retail

Grocers, Redevelopment Projects Highlight Twin Cities Retail

by Jeff Shaw September 28, 2016

It’s hard to argue with the fact that the Minneapolis and St. Paul metropolitan areas are among the most economically dynamic and socially vibrant cities in the United States. With a thriving business environment, strong growth and impressive demographics, Minnesota consistently ranks in the top five of the most educated states in America, according to the United States Census Bureau. The Twin Cities also boast an expanding workforce, outstanding public transportation network and a booming economy. With 17 Minnesota-based Fortune 500 companies, it’s not surprising that the Twin Cities are competitive on a national and even global scale. The competitive energy and high-level activity in the city’s retail marketplace is being fueled in part by a surge of new retailers. The aggressive entry of new tenants to the market, along with the challenge of a 4 percent vacancy rate, is prompting quality spaces to be absorbed almost immediately. As stated in the Welsh Q2 2015 market report, over 1.1 million square feet of retail space were absorbed during 2015, the highest number in the market in over a decade. The vacancy rate for regional mall trade areas is actually closer to 2.6 percent, with numbers for the Minnetonka/Ridgedale Mall trade …

September 28, 2016

Market Reports Midwest Midwest Market Reports Minnesota Multifamily Office

Office, Multifamily Developers Capitalize on Growth in Twin Cities’ West End

by Haisten Willis June 25, 2015

You can hardly open the local paper lately without reading that “Downtown is hot right now; urban living is great.” Yes, downtown is booming. The suburbs are also riding the wave of new mixed-use development and could see more success. It may surprise some, but office vacancy rates and rental rates along I-394 and I-494 rival, and sometimes trump, downtown Minneapolis. The message is clear: convenience has value. The idea of a mixed-use neighborhood where people are living, working, shopping and having fun in one place is a relatively new concept to the Twin Cities. Minneapolis no longer turns into a ghost town after 6 p.m., but many people don’t want to live downtown. They find it too congested and far from work, with little green space and few parking options. If only there was a way to have the vitality of a mixed-use neighborhood without the drawbacks of the concrete jungle, right? Today that question is answered all around the metro area. West End’s Advantages In particular, the West End region of the Twin Cities shares that same long-term vision. With a strong office market long in place, Duke Realty’s addition in 2009 of The Shops at West End, …

June 25, 2015

Industrial Market Reports Midwest Midwest Market Reports Minnesota

Increasing User Demand Spurs New Round of Industrial Development in Twin Cities

by Danielle Everson December 17, 2014

Buoyed by a healthy economy, the Twin Cities industrial market has experienced strong demand for functional, 24- to 32-foot clear height space, with more companies expanding during the first three quarters of the year, according to Cushman & Wakefield | NorthMarq. The market posted nearly 1.3 million square feet of absorption in the first three quarters of 2014, a solid number. The overall vacancy rate for multi-tenant properties 20,000 square feet and above stood at 10.1 percent at the end of the third quarter, down from a high of 16.4 percent in 2010. The bulk/warehouse segment has posted the most leasing activity with 451,097 square feet of net absorption year-to-date, including 140,514 square feet in the third quarter, and a tight 9.2 percent vacancy rate. Office/warehouse absorption totaled 476,032 square feet year-to-date through the third quarter, and 391,676 square feet in the third quarter alone, lowering the vacancy rate in that segment to 9.6 percent. Office/showroom absorption totaled 359,687 square feet during the first three quarters of 2014, lowering the vacancy rate in that segment to 12.8 percent, the lowest since 2006 when it stood at 11.7 percent. The Northeast submarket posted 222,267 square feet of net absorption in the …

December 17, 2014

Market Reports Midwest Midwest Market Reports Minnesota

Brimming with a Renewed Sense of Confidence

by admin June 18, 2014

Dotted with construction cranes, Minneapolis’ skyline tells the story of economic growth the likes of which hasn’t been seen in almost a decade. Record-shattering investments in office space and in employee satisfaction speak to the confidence companies have in the accelerating Twin Cities market. This renewed corporate confidence is buoyed by the lowest unemployment rate of any U.S. metro area with a population greater than 700,000, and is evident by the increasing number of long-term lease commitments (seven-plus years) to the Twin Cities market. The office sector began picking up — first with local investors and now with national investors — soon after the opening of a new baseball stadium for the Minnesota Twins in 2010, which kick-started a rash of high-end, urban multifamily developments. The current multifamily boom in the Twin Cities is expected to bring nearly 10,000 units to the residential market in the coming years. Increasingly, people want to live, work and play downtown. Multifamily, retail and office developers are ramping up the quantity and quality of supply. An additional sign of growth is the $1 billion currently being invested in a new football stadium for the Minnesota Vikings. Renovation Ramps Up Class C office buildings accounted …

June 18, 2014

Market Reports Midwest Midwest Market Reports Minnesota

Franchises Drive Uptick in Retail Leasing in the Twin Cities

by admin May 21, 2014

The Twin Cities retail market continued to improve in the second half of 2013 due to robust leasing activity at neighborhood centers. The vacancy rate registered 7.2 percent at the end of 2013, down from 8.6 percent a year earlier, according to Cushman & Wakefield/NorthMarq. That is the lowest vacancy rate since the fourth quarter of 2008. The market saw healthy absorption of 439,000 square feet during the second half of 2013. With retail spaces filling, rental rates declined modestly, dropping from an average of $27.73 per square foot during the second quarter of 2013 to $27.60 per square foot in the fourth quarter. The rental rate decrease was primarily due to the decline in rates at community centers, as discount retailers negotiated lower rents. Many of these discount retailers filled big-box and junior-box spaces that had been vacant for a long time. (To view larger version of chart, click here.) The Franchise Factor The majority of retailers that entered the Twin Cities in 2013, or expanded their operations locally, were focused on food and services such as hair care, massage, cellular and fitness. Five Guys Burgers & Fries and Yogurt Lab, relative newcomers to the market, now operate multiple …

May 21, 2014

Newer Posts

Older Posts