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Market Report

Minneapolis-St. Paul Retail Market Report

2Q 2023

Migration Trends Strengthen, but Economic
Pressures Challenge Regionally-Tight Conditions

Improved operations impeded by near-term headwinds. A 90-basis-point contraction in the metro’s vacancy rate across 2021 and 2022 restored Minneapolis-St. Paul’s standing as the tightest major retail market in the Midwest entering April. While the metro historically records a vacancy rate below its regional peers, unlike those markets, the Twin Cities’ rate is still 80 basis points above the pre-pandemic low of 2.8 percent in 2018. Upward vacancy momentum is set to continue through the rest of 2023 as some retail tenants reduce footprints or pause expansionary efforts. This trend is partially due to consumers tightening up on discretionary spending amid reduced household income gains. As a result, the metro notes a net relinquishment of 315,000 square feet this year. Local vacancy nevertheless remains below its 15-year average of 4.3 percent. 
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