X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

MINNEAPOLIS-Despite a continued weakening in the office market here during the first half of the year, a slight recovery seems to be on the horizon here. A second quarter report by Marcus & Millichap indicates that as the cuts in the financial sector begin to lessen the economy will begin to slowly rebound. Still, the recession is not over yet.

After seeing 39,900 jobs cut in 2008, and an additional 45,000 jobs expected to be lost this year, the office market is struggling to withstand the pressure. Of the jobs slated to be cut by year-end, 19,700 of them are directly in the office-using portion of the city.

To further aggravate the sector, more than 944,000 square feet of office space will be added to the market by the end of December. Additionally, in 2008 913,000 square feet was brought to market.

As a result of the job cuts and new inventory, Marcus & Millichap executives predict a climb in vacancy for the overall market. By the end of the year vacancy is likely to rise 360 basis points to 20.3%, and this comes after a 160 basis point increase in 2008.

The gap between effective rents and asking rents will continue to widen. The report predicts asking rents to hover around $20.76 per square foot while effective rents will continue to drop to $16.13 per square foot. For effective rents this is a 7.4% decrease from the previous year.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.