Twin Cities Office Vacancy Hits Double Digits

MINNEAPOLIS-For the first time in five years, office vacancy rates have topped 10%, according to a first-quarter report from the Minneapolis office of Grubb & Ellis. “We’re finding businesses and developers are getting cautious and evaluating their options,” says Clint Miller, a top official at the Grubb & Ellis office inMinneapolis. “But we’re still reasonably bullish about the space markets.”

One of the market’s main worries right now is the large amount of space — 1.3 million sf – available for sublease. That accounts for about 19% of all the available vacant space. That’s due to companies cutting back on space requirements, as wellas postponing expansion plans. Most of that — 943,000 sf — is in the suburbs, and most of that in Class A properties; about 382,000 sf is available for sublease in the Downtown areas.

While the downtown markets came in at 6.9%, the suburban markets hit 12.7%, according to the report. That’s despite the fact the suburban office market accounted for most of the absorption, which was up slightly from the fourth quarter’s absorption. Of the 224,573 sf of office space absorbed in the first quarter, 214,729 sf was absorbed in the suburban markets while just 9,844 sf was absorbed in the Downtown markets, according to Grubb & Ellis.