The office market in the southwest suburbs has seen its vacancy rate climb to 18.6 percent in the third quarter, thanks to some projects completed in the past several months and a weak economy that has dampened demand for space. That's higher than the 17 percent vacancy rate for the Twin Cities as a whole, according to Colliers Turley Martin Tucker.

Hempel Properties recently made some modest efforts that counter those trends, adding new tenants and lease renewals at two office buildings its owns in Edina near Hwy. 100 and Interstate 494.

Hempel recently secured 34,000 square feet in leases at One Corporate Center I and One Corporate Center III. Hempel acquired the two buildings, which total 220,000 square feet, last year for about $21.6 million.

New tenants include Axonom, a software consulting firm; Venator, an executive placement firm; and iBusiness Solutions, an enterprise solutions provider. They join major tenants Accenture, Johnson & Condon and Jacobs Engineering.

Brent Jacobson, Hempel vice president of leasing, attributed the uptick in interest to some significant capital improvements at the 1980s-era buildings and bargain-hunting by tenants that might previously have considered only top-tier Class A space.

Hempel said the new and renewed leases put occupancy at a little more than 84 percent at One Corporate Center I and almost at 75 percent at One Corporate Center III.

A business headed by area residential developer Henry Lazniarz filed for Chapter 7 liquidation in connection with a stalled mixed-use project in Eden Prairie that entered foreclosure this year.

In documents filed last week in U.S. Bankruptcy Court in Minneapolis, Lazniarz's Mitchell Crossing Properties listed about $1.3 million in assets and about $2.6 million in liabilities. Lazniarz's attorney John Lamey said the asset total represents the recent value of the land his client bought in 2006 with plans to develop it into about 70 condominium units and an unspecified amount of retail space.

The largest creditor in the bankruptcy filing is Lakeland Construction Finance of Maple Grove, which lent Mitchell Crossing money to buy the 3-acre project site and is owed about $2.1 million. Lakeland began foreclosure proceedings before the bankruptcy filing. Lamey said another creditor with mechanics' liens against Mitchell Crossing also foreclosed on part of the property.

Lamey said the Chapter 7 filing has put a halt on the foreclosure proceedings for now. Creditors, who will meet for the first time this month, could move to change that, Lamey said.

Lamey said Lazniarz, who has done small residential projects in Bloomington, Coon Rapids and Wayzata, is still hoping to find a partner to inject capital into the business so the Eden Prairie project might proceed.

Susan Feyder • 612-673-1723