Minneapolis-St. Paul Retail Market Report

Rising income levels may offset growing financial distress. Tenant demand in Minneapolis-St. Paul is expected to return to positive levels in 2026 after 2025’s record year of negative net absorption. Rising minimum wages, alongside continued household income growth, could benefit consumer demand; however, rising statewide credit card delinquency in 2025 indicates that not all budgets are balanced. Slowing employment growth and sharply lower net migration also signal potential near-term pressure on retail spending. At the submarket level, Maple Grove entered the year with vacancy below 1 percent and is expected to remain tight. A triple-digit basis-point decline in local multifamily vacancy reflects a denser residential base that should support consumer spending. Sizable increases in occupied apartments since 2019 may also reinforce retail demand across Eden Prairie, Apple Valley, and Wright County. In urban areas, Minneapolis’ core may remain better positioned in 2026, with vacancy entering the year near 2 percent, while a 120-basis-point increase has lifted central St. Paul’s rate to around 4.5 percent, outpacing the metro level for the past six straight years.