Quarterly Market Reports

First Quarter of 2025...

The Twin Cities office market recorded 1.3 million square feet of leasing activity across 337 transactions, averaging 3,858 rentable square feet per deal. Many firms are still searching for ways to encourage employees back into the office, often rethinking and reshaping their real estate strategies to support that goal.

Although the city’s strong base of corporate headquarters once provided stability before the pandemic, it has ironically contributed to demand declines in the aftermath. Major employers like Target, UnitedHealth Group, and Best Buy continue to shed surplus space. Across the market, tenants are downsizing or consolidating into fewer locations, typically leasing 20% to 40% less space compared to previous years.

Even with these headwinds, demand hasn’t disappeared — it’s simply become more selective. Newer properties in areas like the West End, I-494/France Avenue, Eagan, and the North Loop are seeing robust leasing activity, outperforming the broader metro, which is still in a period of adjustment.

To view or download our full report, click here.

Looking Back on 2024...

Office vacancy continued to rise, but companies are starting to better understand the utilization of their office spaces, creating a new normal. Across the entire market, there was a negative absorption of -566,456 square feet as historically large occupiers of office space continued to give back space, setting a new benchmark for the market.

The good news is that there were over 227 transactions in the 4th quarter of the year, indicating that companies remain active in securing office spaces that align with their evolving workforce strategies. Tenants continue to migrate toward quality assets with strong ownership structures, creating a clear divide between high-performing and struggling properties. These buildings are transacting at all-time highs, reinforcing their desirability in the current market landscape. As we move forward, the market will continue to adjust to changing occupier demand and economic conditions, reinforcing the importance of prime properties and strategic investments in commercial real estate.

Regardless of the direction your workspace needs are going, the team at Kenwood Commercial is ready to answer any questions you have.

To view or download our full report, click here.

As the 3rd quarter comes to an end, we’re starting to see the bottom of the market. This will be the 12th consecutive quarter of negative absorption, where more office space is being added to the market vs. being leased. The Forum building in Downtown Minneapolis sold for 91% percent less than its previous sale in 2019, which will be a historic low for the market. We’re speculating that the market will remain at the bottom of this cycle for at least another 12 months as additional landlords and lenders work through this new landscape. 

The market has some optimism with the North Loop Green opening, US Bank renewing their large Downtown footprint, and Wold Architects moving from Saint Paul to Downtown Minneapolis. We’re still seeing the ‘flight to quality’ trend as tenants downsize and upgrade their office space.

Kenwood has been tracking the trends, and we’re happy to share our findings with you - click HERE to view or download the full report.

Summer, 2024.

As we reach the halfway point of the year, we remain in the early stages of the current cycle. Since most leases are typically 5-10 years, more than half of all leases signed before 2019 have yet to expire. Additionally, with most tenants having reduced their space by over 30%, we project an increase in vacancy rates. High interest rates, combined with rising vacancies, will likely lead to more buildings being sold at record low prices.

On the positive side, much of this information has been anticipated for a long time. We are beginning to see opportunistic investors become excited, which will help reset the market, benefiting tenants. From a landlord perspective, there is continued strength in certain market segments, and in some cases, landlords are gaining the upper hand.

Regardless of the direction your workspace needs are going, the team at Kenwood Commercial is ready to answer any questions you have.

To view or download our full report, click here.