Softening Economy Impacts Office Sector in Minneapolis-St.Paul

MINNEAPOLIS, MN — Key metrics in the Minneapolis-St. Paul office sector remain strong, but the effects of a soft economy on space demand are becoming evident, pointing to an increase in vacancy by year end, according to a second-quarter Office Research Report by Marcus & Millichap, the nation’s largest real estate investment services firm.

(The 57-story, 774-feet tall Wells Fargo Center, top right photo)

Employment continues to grow, but not in numbers sufficient to generate significant new space needs, as concerns over the state of the economy encourage caution among startup and existing tenants.

“Strong office-using demographics and fairly steady property fundamentals will only intensify interest in the market as economic and credit market conditions improve,” says Solomon Poretsky, regional manager of the Minneapolis-St. Paul office of Marcus & Millichap.

(The 55-story, 1.4 million-sf, 792-foot tall IDS Center, middle left)

Following are some of the most significant aspects of the Minneapolis-St. Paul Office Research Report:

· Employers are forecast to add 8,500 positions this year, a 0.5 percent gain.

· Builders are predicted to bring 800,000 square feet of office space online this year.

· Vacancy is projected to end the year at 15.6 percent.
· Asking rents are forecast to rise 1.7 percent to $22.12 per square foot.

· Effective rents are on track to advance 2 percent to $18/25 per square foot.

(The 58-story, 775-foot tall, 1.4 million-sf Capella Tower, bottom right)

For a copy of the complete Minneapolis-St. Paul Office Research Report, as well as reports on other markets nationwide, visit our website at http://www.marcusmillichap.com/.

Press Contact: Stacey Corso
Communications Department
(925) 953-1716