NAI Everest recently offered more proof that the Minneapolis/St. Paul region is one of the strongest commercial real estate markets in the country.
According to Everest’s first quarter office market report, the Minneapolis/St. Paul market enjoyed positive absorption of about 175,000 square feet of office space in the first quarter of this year. This is leading to a return of an owners’ market in this region.
Part of the reason for this strong market? Minnesota’s unemployment rate is just 5.4 percent, well below the national average of 7.6 percent.
Class-A and Class-B office properties saw their vacancy rates fall to 7.2 percent and 10.4 percent in the first quarter. That’s only a slight improvement from the rates of 7.3 percent and 10.5 pecent they saw in the fourth quarter. Still, it is an improvement, and any improvement in the office market is welcome.
The Twin Cities area also some impressive office sales during the first quarter. NAI Everest ranked the sale of the RBC Plaza as the biggest in the quarter, a sale that came with a price tag of $126.5 million. This sale included the 609,368-square-foot RBC Plaza and the adjacent 68,677 square of retail space known as Gaviidae Common II.
The sale of Plaza Seven was the second-largest of the quarter. This property sold for $43.6 million to City Center Realty Partners in San Francisco.
As NAI Everest points out, most of the office-leasing activity in the first quarter in the Twin Cities came on renewals. But there were some notable new leases, too. The top? Probably the sale-lease back by Delta of the Northwest Airlines Building. Also important was the leasing of 84,000 square feet of space at the Best Buy campus in Richfield, Minn. U.S. Bancorp will enter this space in June.
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