Minneapolis Commercial Office Space for Rent

Q4 2025

Minneapolis Commercial Real Estate Market Report

Focus: Q4 2025 Market Trends

Executive Summary

The Minneapolis-St. Paul commercial real estate (CRE) market in late 2025 is demonstrating resilience and stabilization across key sectors [1, 2]. The Office market is showing "modest momentum" with positive absorption, though vacancy remains elevated due to rightsizing [3, 4]. Industrial fundamentals are robust, with positive net absorption and vacancy holding near 4.4%, despite a slight uptick from new supply [5, 6]. Retail availability remains tight at approximately 3.6%, though the sector is navigating some negative absorption due to store closures [7]. Multifamily is strengthening significantly, with vacancy dropping to 4.3% and rent growth accelerating to 3.5% as the construction pipeline cools [8].

TenantBase Proprietary Data [14] highlights the distribution of active tenant demand over the last 90 days (391 total deals):

  • Retail/Storefront dominated market activity with 61.13% of all searches [14].
  • Warehouse was the second most active sector at 27.88% [14].
  • Office accounted for 11.76% of total search volume [14].

Office Market

Market Overview The Twin Cities office market is bifurcated, with "trophy" assets capturing the bulk of demand while commodity spaces struggle [3]. However, the market has posted consecutive quarters of positive absorption, signaling a potential turning point [3].

  • Vacancy & Availability: The overall vacancy rate stands between 20.2% and 23.2%, depending on the data provider, reflecting a high volume of available space [3, 4]. Direct vacancy in the CBD remains elevated as tenants consolidate [4].
  • Net Absorption: The market recorded modest positive absorption of approximately 12,311 SF in Q3 2025, continuing a positive trend from earlier in the year [3].
  • Rental Rates: Asking rents have remained stable, averaging $31.24 per SF overall, with Class A properties commanding $37.06 per SF [9].
  • Market Drivers: A "flight to quality" continues to define leasing activity. Mid-size tenants (10,000–20,000 SF) are driving suburban demand, while the downtown core sees activity from creative firms seeking high-quality, move-in-ready speculative suites [3].

TenantBase Activity [14]

  • Demand Share: Office accounted for 11.76% of total search volume [14].
  • Lease Term Preference: Demand is heavily concentrated in short-term flexibility [14]:
    • Less than one year: 60.47% of deals [14].
    • 3-5 Years: 18.60% of deals [14].
    • 2-3 Years: 9.30% of deals [14].
  • Size Requirements: Tenants seeking short-term leases in this cycle have larger space requirements than typical. The average lower SF required for a Less than one year term is 5,000 SF, compared to 2,000 SF for a 3-5 Years term [14].

Industrial & Warehouse Market

Market Overview The Minneapolis industrial market remains healthy, with vacancy rates hovering near historical norms and construction activity beginning to moderate [1, 6].

  • Vacancy & Rent: The vacancy rate is approximately 4.4%, up slightly year-over-year due to new deliveries [1, 6]. Average asking rents have reached $8.42 to $9.33 per SF, reflecting sustained growth [5, 6].
  • Demand & Supply: Net absorption was positive in Q3 2025, with reports ranging from 121,000 SF to over 1.2 million SF depending on the inclusion of build-to-suit projects [5, 6].
  • Construction: Approximately 3.4 million SF is under construction, a volume that is being well-absorbed by the market [1, 6].
  • Investment: Sales volume has cooled, totaling $222 million in Q3, as investors navigate interest rate challenges [6].

TenantBase Activity [14]

  • Demand Share: Warehouse accounted for 27.88% of total search volume [14].
  • Lease Term Preference: Demand is balanced across mid-term options [14]:
    • 3-5 Years: 34.62% of deals [14].
    • 1-2 Years: 25.00% of deals [14].
    • Less than one year: 11.54% of deals [14].
  • Size Requirements: The average lower SF required for a 3-5 Years term is 5,250 SF, while the 5+ Years term average requirement increases to 7,929 SF [14].

Retail Market

Market Overview Minneapolis retail remains tight, with low availability protecting landlord pricing power despite some negative absorption from national store closures [7, 10].

  • Vacancy & Availability: The availability rate closed mid-year at 3.6%, one of the tightest figures among commercial asset classes [7].
  • Net Absorption: The market experienced negative net absorption of roughly (235,000) SF in Q2, driven by big-box vacancies [7].
  • Rental Rates: Average NNN asking rents are approximately $17.31 per SF [7].
  • Activity: Leasing volume increased by nearly 65% quarter-over-quarter earlier in the year, indicating renewed tenant interest in prime locations [7].

TenantBase Activity [14]

  • Demand Share: Retail/Storefront activity dominated with 61.13% of all search volume [14].
  • Lease Term Preference: Retail tenants show a broad preference for stability [14]:
    • 3-5 Years: 27.45% of deals [14].
    • 1-2 Years: 25.49% of deals [14].
    • 2-3 Years: 19.61% of deals [14].
  • Top Locations: Tenant interest is highest in the following areas (deal counts) [14]:
    • Minneapolis: 28 [14].
    • 394 Corridor: 10 [14].
    • St. Paul: 9 [14].

Multifamily Market

Market Overview The multifamily sector is strengthening as the supply wave crests, leading to tightening vacancy and accelerating rent growth [8, 12].

  • Vacancy & Occupancy: Vacancy dropped to 4.3% in Q3 2025, the lowest level since 2022, down 60 basis points year-over-year [8].
  • Rents: Average rents exceeded $1,600 per month for the first time, with annual growth hitting 3.5% [8].
  • Construction: New deliveries have slowed significantly, with only 947 units completed in Q3 [12]. Starts are down roughly 80% from peak levels, setting the stage for a landlord-favored market in 2026 [2].
  • Investment: Transaction activity has rebounded, with median per-unit pricing rising to $186,400, reflecting confidence in the sector's recovery [8].

2026 Outlook

Looking ahead to 2026, the Minneapolis market is positioned for "surprising strength" and tighter conditions [11, 13].

  • Housing Heat: The Minneapolis housing market is predicted to "heat up" in 2026 due to affordability and climate resilience, which may spill over into multifamily demand [13].
  • Industrial Balance: With speculative construction slowing, vacancy is expected to remain low, maintaining upward pressure on rents [1, 6].
  • Office Stability: While remote work remains a factor, the lack of new office construction will help stabilize vacancy rates as tenants continue to upgrade to better spaces [9, 11].

Sources

  1. Avison Young: Minneapolis Industrial Real Estate Market Reports | Q3 2025
  2. 1st Select: 2025 Q3 Multifamily Market Report: Minnesota 411
  3. Newmark: Minneapolis Real Estate Market Report | Q3 2025
  4. CBRE: Minneapolis Office Figures Q3 2025
  5. Cushman & Wakefield: Minneapolis Industrial MarketBeat Q3 2025
  6. Colliers: Minneapolis Industrial Market Report Q3 2025
  7. CBRE: Minneapolis Retail Figures Q2 2025
  8. Northmarq: Multifamily Transaction Activity in Minneapolis-St. Paul Continues to Strengthen
  9. REJournals: No end to the high vacancy rates in Twin Cities office market
  10. Cushman & Wakefield: United States Retail MarketBeat Q3 2025
  11. Urban Minneapolis Homes: Winter 2025 Twin Cities Real Estate Market Trends
  12. Cushman & Wakefield: Minneapolis MarketBeats
  13. Reddit: The Minneapolis housing market is expected to heat up in 2026
  14. TenantBase Proprietary Market Data (Minneapolis - Last 90 Days)

Information in this report is aggregated from various third-party sources and synthesized using artificial intelligence and other research tools. While we believe these sources to be reliable, we cannot guarantee the absolute accuracy or completeness of the data. This report is intended for informational purposes to provide market insight and should be independently verified prior to any use in a real estate transaction or legal commitment.