The possibility of a high return on an investment is a reason why some choose to get into commercial real estate. Minneapolis may be a great area to invest in to attract professional tenants that can create a steady income for an investor, as well as other incentives, including the possibility of new opportunity zones.. When reviewing the types of Minneapolis real estate available, how inviting is it to own office space in or near Minneapolis? Is now the right time to buy an office building? Understand more about the demand for office buildings in the commercial real estate market of Minneapolis today.
Investing in Office Buildings
Low, mid and high-rise structures can fall under the office building asset class. Compared with other asset classes, it can be the most volatile sector, as property specific factors and supply and demand can influence the return. Overall economy and job growth for white collar workers can be used to assess demand in an area. An investor should have a market analysis performed to decide whether to buy office buildings in a specific area.
According to various sources, there is a rising demand for offices in Minneapolis. The average asking rent is now 15.9 percent more than the 10-year average. In the first quarter, there has been an increase of 31.3 percent when it comes to leasing activity. However, investors should also know that there has been a slight increase to 18.3 percent in overall vacancy rate. Negative net absorption has been reported during the first quarter but there are predictions of positive absorption for the rest of the year. When investigating the options in this asset class, it may be useful to know that the biggest leasing demand in Minneapolis is seen for Class-A office space.
Investors who are interested in the office building asset class may see a few interesting characteristics, including a stable income from long lease terms. A long lease makes it easier for tenants to budget but may mean that currents rents are at variance with the market rent. This may be a consideration for markets with rapidly increasing asking rents. As with any real estate investment, the potential for a vacancy period and lost rent may be a concern.
Need for a Minneapolis Office
The right location is important for many businesses and organizations. Businesses with a good Crow Wing County office or commercial location can see increased foot traffic, be able to hire from a larger pool of qualified employees, and be situated close to transportation, restaurants, shopping and more. Investors may also see business owners pay a premium for an office space that meets their specific needs.
Meet Minneapolis is one such organization that has recently moved into the heart of Minneapolis. This tourism bureau works to attract people to the area, highlighting places, businesses and events in the city. Now located at 801 Marquette Avenue, it is near the Minneapolis Convention Center and other downtown destinations.
Meet Minneapolis has already seen positive changes in the first few months after the move. The number of tours given in the brief time of being there has already exceeded the amount given during the 12 years at their previous location. Organizations and businesses that need to connect with Minneapolis residents and visitors will find that a city-centric location just might do the trick.
More Insights for Investors
Investors in the office building asset class may see lower vacancy rates when contracting with tenants that get value from an office in Minneapolis. However, changing supply may also impact rental rates for office space. Understanding the microeconomics of the area and other indicators can help those looking to get into buying and leasing offices in the Minneapolis area navigate any challenges that may arise.