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Mpls CBD Class A vacancy rates decline year-over-year
Source: JLL Research
MSP metro employmentin finance & insurance (thousands)
Source: BLS, Federal Reserve Bank of St. Louis, JLL Research
St. Paul is making space for newer, younger residents
Source: Saint Paul Port Authority, JLL Research
114.3 114.8
113.1
111.7
108.9 108.2
109.7
111.7 112.0
113.0
114.2
104.0
108.0
112.0
116.0
15.3%
10.1%
3.6%
1.9%
14.1%
15.5%
12.6%
5.0%
1.5%
15.5%
Capella Tower
IDS Center
Wells Fargo Center
City Center Office
US Bancorp Center
MinneapolisCBD leads in large leasing deals
Vacancy rates in Minneapolis CBD continue their trend of shrinking every
quarter. Vacancy at IDS Center declined 250 basis points since 2014 and the
building now has its lowest quarterly vacancy in recent years. The demand for
premium downtown office space is substantial and even co-working firms are
getting in on the craze. Recently, two shared-space companies out of Chicago,
Industrious and Assemble, leased a collective 36,000 sf with plans to rent out
collaborative workspace to entrepreneurs and small firms by end of year.
Finance and insurance driving expansions and relocations
As of this quarter, metro employment in finance and insurance industries has
finally rebounded to pre-recession levels. The office market has seen substantial
leasing activity from firms like Ally Financial which recently relocated 150
employees to the Shoreview Corporate Center with plans to add another 250
jobs by 2017. Other firms like One Beacon Insurance Group, Securian Financial
Group, Travelers Companies, and General Casualty Company have either
invested in new space or absorbed existing space in all corners of the
Minneapolis-St. Paul market.
St. Paul CBD becoming a rising market
Ecolab finalized its $47 million purchase of the downtownSt. Paul Travelers
tower in August, the site of its future headquarters. Meanwhile, the Pioneer
Press sold its headquarters to a developer planning on renovating the 300,000 sf
building into apartments. With investment like the $63 million St. Paul Saints
stadium, the $957 million Green Line light rail transit, and plenty of new
restaurants and retail, existing availabilitieswill be attractive for both office and
multi-tenant housing. Fortunately, it is expected that Oppidan’s makeover of the
old Macy's building will provide an additional 200,000 square feet of leasable
office space to the St. Paul CBD by 2017.
Shifting landscape offers opportunity for investors
2,257
20%
Expected population growth
in St. Paul CBD by 2020
Office Insight
Minneapolis-St. Paul | Q3 2015
69,540,400
Total inventory (s.f.)
383,327
Q3 2015 net absorption (s.f.)
$25.63
Direct average asking rent
874,296
Total under construction (s.f.)
15.5%
Total vacancy
693,283
YTD net absorption (s.f.)
4.9%
12-month rent growth
51.7%
Total preleased
Current conditions – submarket Historical leasing activity (s.f.)
Source: JLL Research Source: JLL Research
Total net absorption (s.f.)
Source: JLL Research
Total vacancy rate (%)
Source: JLL Research
Direct average asking rent ($ p.s.f.)
Source: JLL Research
966,371 929,169
253,779
-1,661,963
-312,099
585,965
174,317 63,187
913,797
693,283
-2,000,000
-1,500,000
-1,000,000
-500,000
0
500,000
1,000,000
1,500,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD 2015
$22.78
$23.32
$23.89 $23.92
$23.58 $23.50
$23.94
$24.35
$24.66
$25.63
$20.00
$22.00
$24.00
$26.00
2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD 2015
18.0%
16.3%
15.8%
18.2%
18.7%
17.8% 17.5% 17.4%
16.0%
15.5%
12.0%
14.0%
16.0%
18.0%
20.0%
2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD 2015
Landlordleverage
Tenantleverage
Peaking
market
Falling
market
Bottoming
market
Rising
market
4,126,595
4,378,569
4,111,400
3,568,412
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
2012 2013 2014 YTD 2015
©2015 Jones Lang LaSalle IP, Inc. All rights reserved.For more information, contact: Carolyn Bates | carolyn.bates@am.jll.com
Southwest
Minneapolis CBD
Southeast
Northeast
St. Paul CBD
Northwest
West
Minneapolis market

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Office Insight Q3 2015 | Minneapolis-St. Paul

  • 1. Mpls CBD Class A vacancy rates decline year-over-year Source: JLL Research MSP metro employmentin finance & insurance (thousands) Source: BLS, Federal Reserve Bank of St. Louis, JLL Research St. Paul is making space for newer, younger residents Source: Saint Paul Port Authority, JLL Research 114.3 114.8 113.1 111.7 108.9 108.2 109.7 111.7 112.0 113.0 114.2 104.0 108.0 112.0 116.0 15.3% 10.1% 3.6% 1.9% 14.1% 15.5% 12.6% 5.0% 1.5% 15.5% Capella Tower IDS Center Wells Fargo Center City Center Office US Bancorp Center MinneapolisCBD leads in large leasing deals Vacancy rates in Minneapolis CBD continue their trend of shrinking every quarter. Vacancy at IDS Center declined 250 basis points since 2014 and the building now has its lowest quarterly vacancy in recent years. The demand for premium downtown office space is substantial and even co-working firms are getting in on the craze. Recently, two shared-space companies out of Chicago, Industrious and Assemble, leased a collective 36,000 sf with plans to rent out collaborative workspace to entrepreneurs and small firms by end of year. Finance and insurance driving expansions and relocations As of this quarter, metro employment in finance and insurance industries has finally rebounded to pre-recession levels. The office market has seen substantial leasing activity from firms like Ally Financial which recently relocated 150 employees to the Shoreview Corporate Center with plans to add another 250 jobs by 2017. Other firms like One Beacon Insurance Group, Securian Financial Group, Travelers Companies, and General Casualty Company have either invested in new space or absorbed existing space in all corners of the Minneapolis-St. Paul market. St. Paul CBD becoming a rising market Ecolab finalized its $47 million purchase of the downtownSt. Paul Travelers tower in August, the site of its future headquarters. Meanwhile, the Pioneer Press sold its headquarters to a developer planning on renovating the 300,000 sf building into apartments. With investment like the $63 million St. Paul Saints stadium, the $957 million Green Line light rail transit, and plenty of new restaurants and retail, existing availabilitieswill be attractive for both office and multi-tenant housing. Fortunately, it is expected that Oppidan’s makeover of the old Macy's building will provide an additional 200,000 square feet of leasable office space to the St. Paul CBD by 2017. Shifting landscape offers opportunity for investors 2,257 20% Expected population growth in St. Paul CBD by 2020 Office Insight Minneapolis-St. Paul | Q3 2015 69,540,400 Total inventory (s.f.) 383,327 Q3 2015 net absorption (s.f.) $25.63 Direct average asking rent 874,296 Total under construction (s.f.) 15.5% Total vacancy 693,283 YTD net absorption (s.f.) 4.9% 12-month rent growth 51.7% Total preleased
  • 2. Current conditions – submarket Historical leasing activity (s.f.) Source: JLL Research Source: JLL Research Total net absorption (s.f.) Source: JLL Research Total vacancy rate (%) Source: JLL Research Direct average asking rent ($ p.s.f.) Source: JLL Research 966,371 929,169 253,779 -1,661,963 -312,099 585,965 174,317 63,187 913,797 693,283 -2,000,000 -1,500,000 -1,000,000 -500,000 0 500,000 1,000,000 1,500,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD 2015 $22.78 $23.32 $23.89 $23.92 $23.58 $23.50 $23.94 $24.35 $24.66 $25.63 $20.00 $22.00 $24.00 $26.00 2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD 2015 18.0% 16.3% 15.8% 18.2% 18.7% 17.8% 17.5% 17.4% 16.0% 15.5% 12.0% 14.0% 16.0% 18.0% 20.0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD 2015 Landlordleverage Tenantleverage Peaking market Falling market Bottoming market Rising market 4,126,595 4,378,569 4,111,400 3,568,412 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 2012 2013 2014 YTD 2015 ©2015 Jones Lang LaSalle IP, Inc. All rights reserved.For more information, contact: Carolyn Bates | carolyn.bates@am.jll.com Southwest Minneapolis CBD Southeast Northeast St. Paul CBD Northwest West Minneapolis market
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