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Market Report

Minneapolis-St. Paul Office Market Report

2024 Investment Forecast

St. Paul Navigates Office Market Headwinds Well,
Attracting Local Investment Activity

Outside certain areas, office-using employment hurdles underscore tepid demand. Closing out 2023, vacancy in the St. Paul CBD stood below its pre-pandemic measure, making it the only of the metro’s seven largest submarkets to note this dynamic. While up from pre-2020 levels, vacancy in the nearby suburbs and the Midway submarket, spanning Dinkytown to the state capital, was even tighter than downtown St. Paul. Leasing activity here was largely accounted for by financial and insurance-related firms in 2023. A muted list of anticipated move-ins this year, however, accompanies marketwide employment headwinds, likely posing challenges to office space demand. This year will mark the third consecutive annual net loss in traditionally office-using jobs, lowering the segment’s employment base to roughly 35,000 positions below its 2019 measure. As such, Minneapolis-St. Paul has the least recovered traditionally office-using labor force among major U.S. metros. Fewer positions, coupled with a moderate outlook for space demand, are likely to drive up marketwide vacancy and weigh down rents this year.
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