The commercial real estate market in the Twin Cities crept along in the third quarter, with little change in vacancy rates from the second and rents edging down further, according to a report Tuesday by Cassidy Turley.
Vacancies in the metro area's office market remain historically very high, but improved a bit to 20.2 percent in the third quarter from 20.3 percent in the second, as that sector enjoyed its second straight quarter of "positive absorption," or an increase in occupied space, with Class A properties leading the way.
Still, asking rents are sliding. The rents for Class A space dropped to $15.29 -- down from $15.62 in the second quarter and $16.14 in the first. The report doesn't explain the decline.
The office market appears to be at bottom, the report concludes, but will have to add office jobs to soak up all the so-called shadow space -- space that's leased or owned but largely empty and not officially listed as vacant. Shadow space is a lurking problem in the current market.
Dennis Panzer, managing principal of Cassidy' Turley's Twin Cities office, said that the metro office market benefited from an uptick in office jobs in August.
Vacancies in retail and industrial properties metrowide ticked up, while asking rents declined. One area of increased retail activity has been expanding cell phone companies, discount hair salons and quick-serve restaurants such as Chipotle, the report notes.
Jennifer Bjorhus • 612-673-4683