MARKET INSIGHT POST

Forte Principal, Jim Jetland, SIOR, lends insight to the Minneapolis-St. Paul office market report recently released by MNCAR/REDI. As more office leases are expiring and most tenants contemplate their future office space needs, the trend is to downsize the current footprint. This trend directly impacts the market vacancy rate as it continues to rise. It is expected that this phenomenon will continue over the next few years and negatively impact the overall Twin Cities office market. On the positive side, there are some office buildings benefitting from another trend which is a flight to quality as many tenants look to elevate their work environment in hopes of luring more employees back to the office. While most tenants are downsizing their footprint, they are also considering relocation to those buildings that offer an upgraded experience with expanded amenities and tenant-focused events. Landlords that are well capitalized and willing to take the chance on upgrading their buildings amenities and offerings will benefit from this trend while the others will continue to be challenged to succeed.

All Properties: Total Inventory: 127,483,069 sf Total # of Buildings: 1,040 Absorption: (682,748) sf Vacancy: 17.0% Asking Rate: $26.89 NNN New Construction: 744,149 sf Multi-Tenant Properties Total Inventory: 87,915,425 sf Total # of Buildings: 838 Absorption: (270,325) Vacancy: 21.4% Asking Rate: $26.90