Minneapolis Commercial Office Space for Rent

Q3 2026

Q3 2026 Minneapolis Commercial Real Estate Market Report

Focus: Q3 2026 Market Trends

Executive Summary

The Twin Cities office market posted its second straight quarter of positive absorption in Q3 2026, with vacancy down 80 basis points year over year to 27.0%. Industrial vacancy held at 4.9% with 6.3 million SF under construction, and apartment rents grew 2.1%. Tenant demand on TenantBase shifted sharply toward office: office space accounted for 51.8% of all Minneapolis tenant searches in Q3, about four times its 12.4% share in Q2.

Sector Snapshot

  • Office: Recovering. Vacancy fell to 27.0%, with 57,817 SF of positive Q3 absorption.
  • Industrial: Stable. Vacancy was 4.9% in Q2, with 571,806 SF of positive absorption.
  • Retail: Limited new supply. High construction and land costs continue to restrict new development.
  • Multifamily: Steady. Stabilized vacancy was 5.4%, with effective rents up 2.1% year over year.

Minneapolis Tenant Demand Index

The TenantBase Tenant Demand Index tracks what businesses across Minneapolis, St. Paul, and the Twin Cities suburbs are actively searching for on the TenantBase platform each quarter. Because it measures tenant intent before leases are signed, it shows where demand is heading ahead of traditional vacancy and absorption data.

Q3 2026 Search Share by Space Type (July 1 to September 30, 2026)

  • Office: 51.8%
  • Retail/Storefront: 45.9%
  • Warehouse/Industrial: 2.4%

Three-Quarter Trend

  • Office: 12.2% in Q1, 12.4% in Q2, 51.8% in Q3
  • Retail/Storefront: 61.1% in Q1, 66.9% in Q2, 45.9% in Q3
  • Warehouse/Industrial: 26.7% in Q1, 22.0% in Q2, 2.4% in Q3

Key Takeaways

  • Office overtook retail as the top search category, rising from 12.4% to 51.8% of Minneapolis searches.
  • Short-term office demand jumped. 59.1% of Q3 office searches sought terms under one year, up from 36.8% in Q2.
  • Retail tenants favor multi-year leases. 73.7% of Q3 retail searches sought terms of 2 years or longer.
  • The southwest and south suburbs lead location interest. The I-394 corridor, I-494 corridor/Southwest Metro, and Burnsville/Lakeville were the most requested areas, followed by the Northwest suburbs and Eagan/Mendota Heights.

Office Market

Key Metrics (Q3 2026)

  • Vacancy: 27.0%, down 80 basis points year over year (Cushman & Wakefield)
  • Net absorption: positive 57,817 SF in Q3 and 102,351 SF year to date (Cushman & Wakefield)
  • Average asking rent: $30.33/SF, with Class A at $34.58/SF (Cushman & Wakefield)
  • Downtowns: Minneapolis CBD at 32.8% and St. Paul CBD at 33.9% vacancy (Cushman & Wakefield)
  • Submarkets: Northeast lowest at 11.5%, West at 19.3%, Northwest at 22.4%, South/Airport at 25.5%, and Southwest at 29.3% (Cushman & Wakefield)
  • Notable lease: Minnesota Department of Natural Resources, 124,520 SF at 10 River Park Plaza (Cushman & Wakefield)

TenantBase Office Activity

Demand share: 51.8% of Minneapolis tenant searches, up from 12.4% in Q2 and 12.2% in Q1.

Lease term preferences:

  • Less than one year: 59.1%
  • 3 to 5 years: 22.7%
  • 2 to 3 years: 11.4%
  • 5+ years: 6.8%

Space requirements by term:

  • Less than one year: 500 to 1,000 SF
  • 2 to 3 years: 1,625 to 3,375 SF
  • 3 to 5 years: 1,438 to 3,000 SF
  • 5+ years: 833 to 2,000 SF

TenantBase data vs. the market: Minneapolis office tenants on TenantBase are concentrated in the southwest and south suburbs and mostly need under 3,500 SF. The Southwest submarket, at 29.3% vacancy, gives these tenants strong negotiating leverage. Tenants looking in the Northeast, at 11.5%, will find far fewer options.

Industrial & Warehouse Market

Key Metrics (Q2 2026)

  • Vacancy: 4.9% (Cushman & Wakefield)
  • Net absorption: positive 571,806 SF in Q2 (Cushman & Wakefield)
  • Average asking rent: $8.62/SF, with warehouse at $7.27/SF (Cushman & Wakefield)
  • Under construction: about 6.3 million SF, most of it in the Southeast (Cushman & Wakefield)
  • Manufacturing demand: 51.1% of leases over 10,000 SF in the first half (Cushman & Wakefield)
  • Notable leases: Medline, 194,981 SF in Corcoran, and Domino's, 75,000 SF in Lakeville (Cushman & Wakefield)

TenantBase Industrial Activity

Demand share: 2.4% of Minneapolis tenant searches, down from 22.0% in Q2 and 26.7% in Q1.

Lease terms: Q3 industrial searches sought 2 to 3 year terms.

TenantBase data vs. the market: Industrial tenants have the most options in the Southwest at 6.9% vacancy and the Southeast at 6.1%, where most new construction is underway. The Northeast, at 3.5%, is the tightest submarket.

Retail Market

Market Context

  • New supply: little new retail development of substantial size, as construction and land costs make projects hard to finance (Colliers, via REjournals, 2025)
  • Small-format leasing: small leases make up a large share of activity, with 22 of 157 Q1 2025 leases at 1,000 SF or less (Colliers, via REjournals)

TenantBase Retail Activity

Demand share: 45.9% of Minneapolis tenant searches, down from 66.9% in Q2.

Lease term preferences:

  • 2 to 3 years: 26.3%
  • 3 to 5 years: 26.3%
  • Less than one year: 21.1%
  • 5+ years: 21.1%
  • 1 to 2 years: 5.3%

Space requirements by term:

  • Less than one year and 2 to 3 years: 500 to 1,000 SF
  • 3 to 5 years: 3,833 to 7,833 SF
  • 5+ years: 1,500 to 3,000 SF

TenantBase data vs. the market: Most Minneapolis retail tenants on TenantBase want multi-year leases, and those committing to 3 to 5 years need the most space, averaging 3,833 to 7,833 SF. With little new retail construction, larger-format tenants should begin their search early.

Multifamily Market

Twin Cities stabilized apartment vacancy was 5.4% in Q2 2026, unchanged year over year, according to Cushman & Wakefield. Average effective rent was $1,546 per unit, up 2.1%. Net absorption reached 1,590 units in Q2, outpacing 1,319 deliveries, and the construction pipeline fell nearly 14% to 6,001 units.

Q4 2026 Outlook

  • Office: Expect gradual vacancy improvement as aging buildings leave the inventory and suburban small-suite demand continues.
  • Industrial: Expect vacancy near 5%, with new deliveries concentrated in the Southeast.
  • Retail: Expect limited new supply to keep well-located space competitive.
  • Multifamily: Expect conditions to tighten as the construction pipeline shrinks.

Frequently Asked Questions

What type of commercial space are Minneapolis tenants searching for in 2026?

In Q3 2026, office space made up 51.8% of Minneapolis tenant searches on TenantBase and retail/storefront made up 45.9%. Office share rose from 12.4% in Q2.

Which Twin Cities areas are tenants searching most?

The I-394 corridor, I-494 corridor/Southwest Metro, and Burnsville/Lakeville were the most requested areas on TenantBase in Q3 2026, followed by the Northwest suburbs and Eagan/Mendota Heights.

What lease terms do Minneapolis office tenants want?

59.1% of Minneapolis office tenants on TenantBase sought terms under one year in Q3 2026, and 22.7% sought 3 to 5 year terms.

What is the office vacancy rate in Minneapolis?

Twin Cities office vacancy was 27.0% in Q3 2026, down 80 basis points year over year, with the Minneapolis CBD at 32.8%, according to Cushman & Wakefield.

What is the industrial vacancy rate in Minneapolis?

Twin Cities industrial vacancy was 4.9% in Q2 2026, according to Cushman & Wakefield.

How can I find commercial space in Minneapolis at no cost?

TenantBase matches business tenants with vetted independent tenant rep brokers across the Twin Cities at no cost to the tenant. Brokers are compensated by the landlord. Get started with TenantBase.

Sources

  1. TenantBase proprietary search data, Minneapolis, July 1 to September 30, 2026
  2. TenantBase, Minneapolis Commercial Real Estate Market Report, Q2 2026
  3. TenantBase, Minneapolis Commercial Real Estate Market Report, Q1 2026
  4. Cushman & Wakefield, Minneapolis Office MarketBeat, Q3 2026
  5. Cushman & Wakefield, Minneapolis Industrial MarketBeat, Q2 2026
  6. Cushman & Wakefield, Minneapolis Multifamily MarketBeat, Q2 2026
  7. REjournals, Twin Cities Retail Sector (Colliers), 2025

Disclaimer

Information in this report is aggregated from third-party sources and TenantBase proprietary platform data, and was synthesized with the assistance of AI. Market metrics reflect the most recent published data available at the time of writing. TenantBase search data reflects tenant activity on the TenantBase platform and is not a measure of total market leasing. All figures should be independently verified before making real estate decisions.