New development turns focus outside of the CBD core
Over the years, the Minneapolis CBD has enjoyed a steady increase in office inventory fueled by surges in new construction. Each decade since 1970, Minneapolis CBD has averaged 5.15 million square feet of new office construction. The peak in the commercial real estate boom occurred in the 1980s with more than 9 million square feet of new CBD office development added to the landscape.
However, new construction in the CBD has slowed in this decade. A total of 2.14 million square feet has been delivered thus far, and only 100,000 square feet is currently under construction as part of Kraus-Anderson’s new headquarters. This represents only 42 percent of the decade’s expected average and considering there are only 1.5 years left in this decade, we are not on track to meet our typical numbers.
Does this signal a lack of demand or lack of local investment? Not exactly. Instead, investors are shifting their attention beyond the core CBD. In this decade alone, 89 percent of new office space has landed outside of the core CBD. This shift in attention is driven, in part, by the large projects that have helped rejuvenate areas outside of the core CBD like Target Field, U.S. Bank Stadium and the Green Line extension.
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