As Consumer Expectations Shift, Retailers "Get Creative"
Vacancy and Absorption Trends
The vacancy rate in the Minneapolis-St. Paul retail market fellslightly to 5.7% in Q2, after rising each of the previous three quarters. The market has remained steady between 5.5-6.0% for the last year, maintaining vacancy averages above the low point of 4.4% in 2015. Quarter Two saw nearly 140,000 square feet of absorption, accounted for by new tenants in Regional and Community Centers taking 129,000 of the total 140,000 square feet of absorption. The largest of these new tenants include Burlington Coat Factory, Designer Shoe Warehouse (DSW) and Urban AIR.
The majority of the positive absorption was geographically centered around the Northwest and Southeast areas of the metro. The Southeast growth continues to be driven by new multi-tenant construction in the Central Park Commons development in Eagan. Vacant out-parcels and junior box space in Inver Grove Heights and Oakdale accounted for the majority of absorption changes. The Northwest also had strong absorption this quarter due to a number of small changes in tenant occupancy throughout the submarket. The Arbor Lakes development, in Maple Grove, is leading the Northwest submarket in overall absorption.