office space in the newer buildings seems to be doing somewhat better. I don’t expect to see a great deal of improvement in those numbers until we start to see some stronger job growth in our market.The Twin Cities metro office market’s vacancy rate reached a 19-year high of 19.9 percent at mid-year, NorthMarq reported. On the upside, that was only a slight rise from the 19.6 percent vacancy rate at the end of 2009.
St. Paul’s mid-year office vacancy rate was 22.3 percent, a slight improvement from 22.6 percent in 2009, NorthMarq reported. The only submarket faring worse was the northwest suburban area at 24.9 percent. In Minneapolis, the central business district’s vacancy rate at mid-year was 19.7 percent.
In St. Paul, Class A office space, the newest with the most amenities, had the lowest vacancy rate at mid-year of 17.4 percent; Class B’s was 22.9 percent and Class C, 36.1 percent.
For the Twin Cities market overall, Class A vacancy was 17.2 percent at mid-year; Class B, 22.1 percent and C, 24.2 percent.
Tenants are the potential winners with plenty of options in all submarkets, the NorthMarqreport said. Landlords offer an increasing willingness to cut rates and increase concessions. The average square-foot rental rate metrowide at mid-year declined to $12.61 from $12.87 at year-end.
Meanwhile, the Eden Prairie office of Cushman & Wakefield said the combined Minneapolis/St. Paul central business district vacancy rate rose to 19.5 percent at mid-year, up from 19.3 percent at the end of the first quarter and above the improving national average of 14.8 percent.
Gita Sitaramiah can be reached at 651-228-5472
