Following Chicago, the Twin Cities metro area is the Midwest’s second largest economic center and composed of Minneapolis, St. Paul, and the surrounding suburbs. An abundance of lakes, wetlands, creeks, waterfalls, and the Mississippi and Missouri Rivers define the area. Minneapolis is the larger and more recognizable of the two cities and is known for its impressive music and performing arts scenes as well as its global strengths in business, healthcare, finance, education and research, technology, and manufacturing. For an affordable urban environment filled with economic opportunity and affordable real estate, Minneapolis is hard to beat.
Office Space | Minneapolis Lease Data & Trends
Companies considering office space in Minneapolis and St. Paul will find that there’s a fairly significant difference in average rent, especially across Class A inventory. In Minneapolis, commercial tenants can expect to pay an average rent around $32 per square foot compared to St. Paul’s average of $24 per square foot. Office space in Class A buildings is in greater supply in Minneapolis, although vacancy rates for Class B product are nearly twice as high in both cities.
Minneapolis sees the bulk of new development, with more than 1 million square feet of Class A office space under construction. No new Class A product is currently being developed in St. Paul, but about 55,000 square feet of Class B product is underway. In addition to developers, companies are seeking their own means of creating the perfect office space: Thrivent Financial, one of many active financial services firms in the area, is taking steps to design a ground-up office development next to its current headquarters.
Market Additions & Ongoing Development
One promising development is United Properties’ Gateway Block, which will be the first new multi-tenant office construction in Minneapolis’ Central Business District since the turn of the century. The 33-story building will be located just north of Nicollet Mall and contain 1 million square feet of office, hotel, and residential space. Although Gateway Block will likely open in 2021, the Royal Bank of Canada (RBC) has already signed on as the first commercial tenant and intends to lease 300,000 square feet of office space.
Commercial landlords in the Twin Cities strive to attract long-term tenants by investing in renovations to create mixed-use office spaces that offer unique character and an abundance of amenities. Companies will also find that tenant improvement allowances are commonly provided in their lease, a great incentive to sign a multi-year lease. New Minneapolis tenants in 2018 include Express Scripts, nVent, Jostens, and CoBank, while local startups like Bellacor, Bright Health, and Flipgrid have made relatively recent relocations to Downtown Minneapolis office space, together occupying about 50,000 square feet of office space.
Hub for Startups, Coworking, and Flexible Lease Office Space
The 2017 Kauffman Index lists Minneapolis as one of the country’s most entrepreneurial cities, and local startups tend to have a high average growth rate of 121%. The Twin Cities office market is ideal for growing startups seeking to expand. Startups and entrepreneurs who might not be ready for a long-term lease have their pick of co-working spaces operated by WeWork, Regus, Industrious, and more. In fact, within the next year, approximately one million square feet of coworking space will be available throughout Minneapolis.
Minneapolis Office Space for Lease | Popular Neighborhoods
The Downtown submarket of Minneapolis has over 27 million square feet of office space with a 20.5% vacancy rate. Landlords ask for an average of just over $28 per square foot, which is more than $10 less than Downtown Chicago and makes Minneapolis an appealing Midwest alternative. Private research, medical services and technology, and energy conservation are three strong industries in the area. With a highly educated hiring pool and a trending migration of young professionals to the city, companies looking to open office space in Downtown will find it easy to put together a talented staff. For employees who live and work in the CBD, walking is the easiest way to get around, and the Skyway System conveniently connects buildings across 11 miles of Downtown, many along the core shopping and entertainment strip Nicollet Avenue. Both the METRO Blue and Green Lines run through Downtown, and the Northstar commuter rail transports workers from the northwest suburbs to Target Field Station. There are many bus routes to choose from and, in the Downtown Zone, bus rides only cost 50 cents.
Southwest Minneapolis contains over half of all the commercial real estate inventory in the Minneapolis CBD. Class A product rents for an average of $29.39 per square foot. Smaller districts such as Armatage, East Harriet, Fulton, Kenny, Kingfield, Linden Hills, Lynnhurst, Tangletown, and Windom are all within the Southwest submarket. In addition to office space, this neighborhood has a high volume of parks and trails along both Lake Harriet and Minnehaha Creek. Companies with a focus on landscaping, remodeling, and real estate will find themselves in excellent company in Southwest Minneapolis, and software companies like Echidna and DevJam are increasingly drawn to the area. The Orange and Green METRO Lines serve different areas of Southwest, and drivers can commute to Southwest via I-35 W to the east and Highway 100 to the west.
Popularly considered still a part of Downtown, the Warehouse District and North Loop are used synonymously to describe most of the area northwest of 1st Avenue North, between the CBD and the Mississippi River. The Warehouse District is listed on the National Register of Historic Places and is characterized by the 62 uniform warehouses along a stretch of seven blocks. This area is high in demand for businesses and locals looking for a dynamic live-work-play environment with eclectic art, dining, and shopping experiences. Target and Best Buy lease office space in the area, and Amazon recently expanded their North Loop footprint. Most residents in the area walk or bike to work, and commuting by public transit around the district is very efficient.
The smaller of the Twin Cities, St. Paul has only a quarter of Minneapolis’ inventory at the same vacancy rate and leases office space in the low- to mid-$20’s per square foot. The city is often defined by I-94 to the north and the Mississippi River to the south and has an older, art-deco vibe compared to Minneapolis. Notable tenants in the city include Ecolab Inc., Travelers, Patterson Companies, and Securian Financial. Public and government industries will benefit from proximity to the Minnesota State Capitol in Downtown St. Paul. The METRO Green Line connects the Twin Cities, and once you’re in St. Paul it’s incredibly easy to get around by foot.
Getting Around Minneapolis, MN
Over half of the people working in Downtown Minneapolis-St. Paul commute to work in ways other than driving solo, which isn’t surprising given how navigable the city is by foot, bike, and public transit. Commuters also regularly use carpools, vanpools, and car-shares.
The METRO Blue Line connects Downtown Minneapolis to both the MSP International Airport and Mall of America, while the Green Line runs through the University of Minnesota campus and connects to Downtown St. Paul. For those living in the northern suburbs, the Northstar Commuter Rail travels between Big Lake and Target Field Station.
Cyclists have their choice of off-street trails including the Cedar Lake Trail, Kenilworth Trail, Light Rail Trail, Midtown Greenway, and trails along the Mississippi River and often bike to work year-round. Buses are equipped with bike racks and there are 40 miles of dedicated bike lanes, further encouraging those who enjoy biking to work. The Nice Ride bike share also supplies nearly 2000 bikes at over 150 stations.
The Twin Cities are both served by the MSP International Airport, with international, domestic, charter, and regional flights. A majority of flight traffic is with Delta Air Lines, which uses MSP as its second largest hub. Compared to airports of similar size, MSP is often ranked as one of the Best Airports in North America, providing business guests with an impeccable first impression of the city.