Minneapolis–St. Paul office market report

For the most part, trends from the previous quarter persisted in the Twin Cities office market. Companies continued to sublease major headquarters and decrease space. In the latest major example of this, Thompson Reuters committed to sublease roughly 300,000 square feet at the Prime Therapeutics building in Eagan – a reduction of about 800,000 square feet of office space from their previous campus. Other companies renewed their commitment to the central business district, like the Buyers Support Group with their move to the Dayton’s Project, but the North Loop is still proving to be the most attractive urban submarket. And investors are beginning to take advantage of office properties that were given back to their lenders, as Hempel reportedly purchased LaSalle Plaza from Northwestern Mutual for less than a third of what was paid for the property in 2011. 

But ultimately, this appears to be a moment for new opportunities to open up in the market. Some office buildings will be purchased at a discount while others are repurposed or demolished. The increase of sublet space in Class A buildings could attract new companies looking to upgrade their offices. Brokerage firms are getting more creative with attracting tenants, as shown by the increasing popularity of spec suites, and more major, institutional companies appear to be driving their employees back to the office. This gives us reason to be optimistic that the downtown markets will begin to experience some growth by the end of the year.