Micro Report: Choose Your Office Space Advantage — Downtown Minneapolis vs. I-394
By Chris Rohrer, Broker & Pete Kostroski, Broker | Rokos Advisors
The Twin Cities office market is sending a clear signal: Downtown Minneapolis continues to battle record-high vacancies, while suburban corridors like I-394 are holding steady with healthier fundamentals. For business leaders, that split isn’t just a market statistic — it’s a call to action. Your next lease decision could either lock in unnecessary costs or unlock leverage that safeguards your bottom line.
Vacancy Is Driving Negotiation Power
In Q2 2025, the Minneapolis CBD reported vacancy of roughly 33% — among the highest in the metro. By comparison, suburban markets such as I-394 hovered closer to 18%. That gap matters.
For downtown tenants, elevated vacancy translates to leverage. Landlords are under pressure, and that opens the door to meaningful concessions: tenant improvement packages, extended free rent, and added flexibility. Downtown also continues to offer centrality, prestige, and access to the skyway system — making it attractive for businesses that value face-to-face client interaction, employee networking, and proximity to civic or cultural institutions.
Along I-394, lower vacancy reflects stability. While landlords may not be as aggressive with concessions, tenants benefit from convenient access, ample parking, and fewer risks tied to half-empty towers.
Rates Tell Part of the Story — But Not All
Downtown asking rents still average $33+/SF full service, compared to about $30/SF in suburban markets. On paper, downtown looks pricier — but the real difference is in the economics behind the rent.
In the CBD, deep concessions often bring effective costs down. Along I-394, concessions are lighter, but lower operating costs, easier commutes, and stronger employee retention drivers frequently make suburban space the better long-term value.
When you look beyond base rent and include parking and operating expenses, the financial story becomes even clearer. For a 20,000 SF tenant with 80 parking stalls, here’s the annual cost comparison:
| Downtown Minneapolis (CBD) | I-394 Corridor |
|
Rent: ~$665,000 Parking: ~$216,000 OpEx: ~$300,000 Total: ~$1,181,000 per year |
Rent: ~$599,200 Parking: ~$72,000 OpEx: ~$240,000 Total: ~$911,200 per year |
For executives, this means the true focus should be total occupancy cost — not just the asking rate. Parking, OpEx, and build-out dollars can shift the equation dramatically.
What Business Leaders Should Do Now
If your lease is downtown: Leverage the high vacancy. Benchmark your rent, push for aggressive concessions, and negotiate terms that give you future flexibility. At the same time, weigh the value of staying central — if visibility, skyway connectivity, or cultural proximity are priorities, those factors may outweigh cost savings elsewhere.
If you’re considering I-394: Don’t view savings as rent alone. Factor in accessibility, parking, and retention benefits — intangibles that translate into real cost advantages.
If your lease is expiring within 16–18 months: Start evaluating options today. Early exploration of both downtown and suburban space creates leverage with your current landlord and gives you time to compare alternatives before any renewal deadlines. Most renewal provisions require notice at least 12 months before lease end.
Bottom Line
Downtown Minneapolis offers leverage and centrality. The I-394 corridor offers stability and efficiency. The real opportunity lies in knowing how to use each to your advantage — whether that means pushing for aggressive concessions in a high-vacancy tower, or securing long-term value in a stable suburban corridor. Strategic, informed decision-making is what turns market conditions into real savings for your business.
Wondering where the right location is for your business? Connect with Rokos Advisors today to understand which market dynamics align best with your goals.
Rokos Advisors is an award-winning Minneapolis - St. Paul based commercial real estate/tenant representation firm specializing in helping businesses find the perfect office or industrial space for their company.