Selling downtown Minneapolis skyscrapers a tall order these days

The downtown Minneapolis commercial real estate market continues to struggle, with limited office building transactions attributed to remote work trends and rising interest rates. Brokers Ryan Watts and Harrison Wagenseil of CBRE have played a pivotal role in several notable sales, including the $225 million RBC Gateway in 2023, which was among the largest office sales in the country at the time. Watts indicates that while the tenant user side may have hit its bottom last year, the capital markets in Minneapolis are also stabilizing. He notes that investors are hesitant to return to the market, preferring primary markets like New York and Los Angeles for their higher returns. The brokers highlight that international capital has retreated, and lenders are increasingly involved in negotiations.

This shift in focus towards ownership structures and current valuations reflects a changing landscape in commercial real estate. The outlook remains cautious, with an acknowledgment that recovery will not be immediate. As clarity returns to office space needs, the potential for improvement in the market may gradually materialize.