The Minneapolis retail market saw 344,718-square-feet in positive net absorption in H1 according to a new report by CBRE, driving down the vacancy rate to 7.3%, a 0.3% drop from H2 2018.
Overall asking rates fell slightly to $19.24-per-square-foot, a 5 cent decrease from H2. Calhoun and the Ridgedale submarkets continue to be the exception across the metro, with above-average asking rates at $27.68-per-square-foot and $26.94-per-square-foot, respectively.
“While we have had some recent closures and bankruptcies from junior big-box retailers, several discount retailers have taken advantage of the market and have filled those vacancies,” said CBRE’s Peter Dugan. “Regional malls have also implemented new ways to stay competitive, incorporating new anchor tenants and mixed-use development in their buildings.”
Despite the onset of online grocery, brick-and-mortar grocery continues to grow and represent the largest retail leases across the Twin Cities, as Cub Foods leased a 46,127-square-foot property in Minneapolis, the largest in H1, followed by the CBRE represented ALDI lease of a 24,998-square-foot property in St. Paul. Aldi is scheduled to have 70 stores in Minnesota by the end of 2019, second only to Cub Foods.
There is also more than 1 million-square-feet of retail currently under construction, including the 245,000-square-foot Scheels store in Eden Prairie, the 185,000-square-foot Twin Lakes Station in Roseville and the 206,209-square-foot Menards in Apple Valley.
Other H1 highlights of the report include:
- Kraus-Anderson’s $31.1 million purchase of Midway Marketplace in St. Paul was the largest sale in H1.
- Retailers who use omnichannel selling strategies continue to be favored by financial performance data.
- Due to e-commerce and outdated operating models, several investors are exercising caution with the long-term viability of several tenants.