Minneapolis-St. Paul Office Market Report

Core-periphery divide increasingly favors the latter. Suburban submarkets enter 2026 on more even footing, with vacancy outside core areas falling below 12 percent for the first time since early 2023 — one of the lowest rates in the nation. Demand has been particularly notable among properties built after 2010, which saw greater leasing activity last year. Firmer suburban demand, reflected in nodes like the Interstate-494 Corridor and suburban St. Paul, should underpin the metro’s modest vacancy improvement in 2026. In contrast, the central business districts of both Minneapolis and St. Paul head into the year from weaker positions, with vacancy continuing to rise in 2025. This trend, alongside soft overall hiring in office-based roles and limited new corporate growth downtown, points to another year of subdued demand in the urban cores. Even so, muted construction across both CBDs, coupled with an expanding slate of office-to-alternative conversions, may help limit further vacancy increases in downtown settings.