Moving into 2012, the signs continue to show our commercial real estate market is headed in a positive direction. The office market, while still muted in overall demand and challenged by unemployment, has its bright spots. Many companies are gaining confidence and their workplace strategies are evolving.
A few highlights in the market from the forthcoming Colliers 2011 Q4 Office Report:
The vacancy rate in the Twin Cities office market stands at 16.0% down from 16.6% in Q3. The strongest occupancy is along the 394 Corridor with Class A at 7.2%. Class A tenants in the Corridor with expirations coming up may want to analyze space utilization before resigning.
The Southwest office market vacancy rate stands at 16.6% with big investment sales at Two MarketPointe and the sale, sale/leaseback of the United Health former ADC Campus. Despite an uptick in small to mid-size groups looking, large blocks of vacancy still exist and will make SW a tenant’s market into near future.
The Minneapolis CBD’s vacancy rate is 13.1% with Nicollet Mall at near 5% compared to 17% for the rest of the Class A Office Market. Tower vacancy above the 25th floor is under 3%. Slow and steady is predicted here but opportunities can still be found, especially with Class A subleases.
The St. Paul CBD’s vacancy stands at 20.9% and had negative absorption of 119,543 for 2011. 61% of the CBD inventory is Class B and much of it is older and functionally obsolete. Landlords will need to seek more progressive ideas and new adaptive reuse strategies to compete in attracting a new generation of tenants.
Airport-South of the River vacancy rate is 18.9% and the positive news in the submarket includes the announcement of a new 138,000 square foot data center that could create 100 technology jobs.
As companies renew and reshape their office space, places like third party retail or wholesale data centers are becoming an integral part of the real estate strategy. The traditional IT footprint is outsourced to an environment that better serves the enterprise and balance sheet.
Here at Colliers we are fortunate to have great leadership like Tim Huffman, Global Director of the Technology Solutions Group, advising on mission critical and disaster recovery facilities and assisting in establishing, assessing and locating data center or co-location requirements. As a member of the Colliers TSG team, I am working with Tim to help bridge the gap between IT and real estate for our clients.
Please contact us if you have any questions or if we can assist you with any strategic real estate analysis.
All the best for a prosperous 2012!
Flickr photo cred: jfpalmer