By Teresa Borgen, Newmark
From record-high leasing rates to historically low office sales volume, the Minneapolis-St. Paul market continues to present a complex and evolving landscape. Still recovering from lasting effects of COVID-19 and civil unrest during 2020, some submarkets are thriving, while others continue their gradual recovery. Here’s a synopsis of what’s happening in the market.
The haves and have-nots
While the Minneapolis central business district (CBD) has been among the slowest downtown office markets in the U.S. to recover since the pandemic turmoil of 2020, recent activity suggests the submarket is showing signs of revival. Several high-profile relocations among national law firms underscore the trend, with firms such as Husch Blackwell, Cozen O’Connor, Faegre Drinker, Saul Ewing and Robins Kaplan making long-term commitments, some even growing their footprint.
The Minneapolis CBD has also attracted several recent relocations from the suburbs, with tenants like HNTB, Yardstik and Pepper Foster Consulting moving for enhanced accessibility to public transit and easier opportunities for growth. Given the migration to suburban office markets between 2020 and 2022, these moves and expansions are encouraging signs for the Minneapolis CBD, as well as other downtown markets in the U.S.
While these developments are certainly positive for downtown, many of these long-term commitments likely would not have been possible without the repositioning and renovation of Class A office towers such as Wells Fargo Center and Capella Tower.
The local owner of Wells Fargo Center, Onward Investors, has committed to renovating the building’s first floor and skyway-level common areas — a long-awaited refresh — and has recently signed a lease with an upscale, full-service restaurant run by local celebrity chef, Gavin Kaysen. These investments follow a comprehensive amenity upgrade completed in 2021.
Likewise, Capella Tower has continued to enhance its tenant experience through the addition of a new conference center, entertainment and hospitality areas and a golf simulator.
Still, other pockets of downtown continue to face challenges — specifically the Class B office sector. Pre-pandemic, these properties were considered highly competitive; most had undergone renovations and added elevated amenities such as expansive tenant lounges, a variety of food offerings and retail, and fitness centers that rival a condensed version of Lifetime Fitness.
Despite strong amenity packages and desirable locations, many now face occupancy challenges. Factors such as upcoming loan maturities or landlords with limited access to capital contribute to reduced prospect activity, making it increasingly challenging to transact deals.
Hot spots
Just outside the Minneapolis CBD, the North Loop micro-market has experienced a more balanced recovery. With creative office inventory woven among apartments, bars, restaurants and other trendy retail, companies continue to choose this area for its live-work-play advantages. The area further benefits from a relatively low crime rate, and buildings like Tractorworks and Steelman Exchange with onsite parking lots help alleviate an otherwise low parking ratio in the neighborhood.
Further west, the West End micro-market mirrors the story of the Minneapolis CBD. Class A buildings continue to outperform, achieving higher occupancy rates as well as increasing rental rates, while Class B properties continue to face ongoing leasing challenges. To combat this trend, local owner and developer Hempel recently acquired two buildings in the West End Office Park, razing one of the structures for a mixed-use development of multifamily and retail. The firm is planning to redevelop the second into seniors housing.
With limited high-quality space remaining in the aforementioned micro-markets, activity has migrated to the remainder of the tightening West and Southeast markets. One & Two Meridian Crossings in Richfield, just 15 minutes south of Minneapolis, are further examples of the flight to quality.
Piedmont Realty Trust recently repositioned the two-building, 400,000-square-foot complex, which was formerly 100 percent occupied by U.S. Bank. Piedmont transformed the interior from a dated 1980’s-era office environment into a modern Class A workplace resembling a Restoration Hardware showroom. Even before renovations started on the second building, the complex was 85 percent leased without any mid-sized blocks of space remaining.
Across the river, the St. Paul CBD continues to face headwinds, including public safety concerns, homelessness, low occupancy rates and an entire portfolio of buildings going to auction. However, there are signs of progress. Multiple St. Paul nonprofit organizations focused on advancing redevelopment opportunities recently received over $45 million in funding by the Saint Paul & Minneapolis Foundation, as well as an additional $30 million provided by Securian Financial and the Bush Foundation.
Additionally, these organizations have acquired Alliance Bank Center and the Empire and Endicott buildings. While the path to recovery remains gradual, these actions help support the continued revitalization of downtown St. Paul and enhance its appeal for businesses and tenants alike.
Meanwhile, approximately 10 miles south in St. Paul’s Highland Park neighborhood, the 122-acre former Ford Assembly Plant, which closed in 2011, is in the process of a massive redevelopment into a sustainable community that will total 3,800 residential units along with office, retail and civic space. Although the project’s vision has been the subject of considerable debate within the community, its scale and ambition make it one of the region’s most closely watched redevelopment efforts. Its long-term success will depend not only on execution, but also on how it is ultimately received by the surrounding community.
There’s a pattern here, and not an uncommon one: Well-located, amenitized and repositioned buildings with stable ownership remain the preferred choice for tenants in the Minneapolis/St. Paul office market, while lower-quality or underinvested assets face a more uncertain road ahead.
Is working from home over?
Contributing to the success of well-occupied buildings in the Minnea-polis-St. Paul market is the continued return-to-office trend. In the last year, major employers including General Mills, RBC and United Health Group have mandated in-office requirements to four days per week, with many smaller companies following suit.
And while Target terminated its 900,000-square-foot lease in the CBD, the company continues to operate its nearby owned headquarters and has reinforced its commitment to in-person work. Most employees are now expected in office three days per week, and approximately 150 remote merchandising employees have been asked to relocate to Minneapolis with relocation assistance.
Industrial strength
The Minneapolis-St. Paul industrial market remains strong, supported by historically low vacancy rates and steady year-over-year rent growth.
Much like the office market, modern and newly delivered industrial inventory continues to outperform older assets. And while construction deliveries and net absorption have moderated from peak levels, new construction remains steady with 7 million square feet currently under construction and an additional 670,000+ square feet planned.
Highlighting the attractiveness of the region, Brookfield, one of the largest alternative investment management companies, entered the market by acquiring a 19-building portfolio of industrial properties from local developer and investor Capital Partners for $166 million. Given current market conditions, Minneapolis/St. Paul is expected to remain a coveted market for investors for years to come.
In conclusion
Minnesota is home to 18 Fortune 500 headquarters, the highest per-capita concentration among U.S. metros. The local economy is anchored by a diverse set of industries, including biotechnology, medical devices, food science and water technology, along with a strong financial services industry that rivals larger markets.
Cargill, the largest private company in the U.S., was founded and is still headquartered here. Moreover, additional highly respected and nationally notable companies based here include corporate giants like Target, U.S. Bancorp, General Mills, Ameriprise Financial, Best Buy and Land O’Lakes.
In conclusion, despite the challenges of recent years, the Minneapolis-St. Paul market appears well-positioned for continued growth and recovery. The “X” factor will be how well local owners cultivate their properties and whether the return-to-office trend continues. Equally important will be the ability of local business leaders to work collaboratively with their government counterparts.
In decades past, local business and government leaders collaborated to build a dynamic environment that was the envy of the nation. Their efforts helped enrich our community and way of life. Recent developments indicate some very promising results, but important work remains. There is growing optimism that Minnea-polis-St. Paul is entering a new era of renewal — let’s maintain that momentum and build something truly special. After all, we Minnesotans don’t just settle for average.
Teresa Borgen is a director with Newmark. This article originally appeared in the September 2026 issue of Heartland Real Estate Business magazine.