Q2-2022 Minneapolis-St. Paul Office Market Update

ECONOMIC OVERVIEW:

According to the Bureau of Labor Statistics (BLS), the unemployment rate for the Mpls-St Paul metropolitan statistical area (MSA) decreased 210 basis points to 1.6% for May 2022 from 3.7% for May 2021. The unemployment rate for the US was 3.6% in May 2022 down from 6.1% last year. State of Minnesota unemployment rate was 2.0%. The Mpls-St Paul MSA saw an increase in job growth as well as an increase in office job growth in professional, financial and information with 15,700 during the same period.

MARKET OVERVIEW:

The Mpls-St Paul office market, consisting of 130 msf of space in seven counties across the metro saw (132,200) sf negative absorption for Q2 2022 and shows an overall vacancy rate of 15.7% for all properties. This quarter shows 76,000 sf of direct positive absorption while subleases accounted for (208,000) sf negative absorption. Multi-tenant only properties posted 20.5% vacancy with (173,700) sf negative absorption during Q2 2022 of which 34,000 sf positive absorption was for direct space and (208,000) sf negative absorption was for subleases. During Q2 2022 there were 18 construction projects throughout the market totaling just over 1.0 msf. Five properties have been delivered YTD with 672,000 sf.