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MINNEAPOLIS-According to a recent report put out by Marcus & Millichap, the Minneapolis-St.Paul retail market just experienced its second consecutive quarter of negative net absorption. Local experts believe the market will continue to soften as the year progresses and more product comes online.

“Despite weak conditions, buyers remain interested in local retail properties due to the Twin Cities’ favorable demographics and growing population,” says Solomon Poretsky, regional manager of the Minneapolis office of Marcus & Millichap.

A number of retailprojects that had broken ground before the significant downturn in the economy, are due to come online before the end of December. A total of 937,000 square feet of retail space will be added this year, after 2008 saw the addition of 800,000 square feet of new product.

A number of retailers closing their operations drove vacancy up 110 basis points to 9.8%. In 2008 vacancy rose 130 basis points. In conjunction with this rental rates fell 1.9% to an average of $17.62 per square foot. Effective rents dipped even further, falling 3.7% to $15.27 per square foot.

By the end of 2009, a total of 56,000 jobs will be cut from the workforce this year, which is a 3.2% drop in the market’s employees. This follows on the heels of the loss of 40,000 positions in 2008.

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