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Minneapolis Downtown Real Estate May be Not That Cheap As Recently Reported

CBRE Group, Inc is an American commercial real estate company with a headquarters located in Los Angeles California.  CBRE has recently made Minneapolis a star of a very bullish report that confirmed the conclusions of a report that says the smart location choice for employers is downtown.  In this column, it was stated that downtown or city centers attract young workers because transportation was easy and that "the smart choice is the city".  It was also mentioned in that column that, Archie Black, the 53-year old CEO of SPS Commerce, which moved into downtown Minneapolis in 2004, said leaving downtown is unthinkable. 

He further quoted, "Here's the difference between my generation and the 20-somethings.  When I was a 20-something I took the bus because I couldn't afford parking. The 20-somethings now take the bus because they want to take the bus."

It turned out, however, that the real estate group's rental figure for Minneapolis was not accurate.  This week Star Tribune has reported that the CBRE Group had contacted them to say that the figure highlighted in its report is "gross" rent.  Therefore, this means that it included operating expenses such as utilities, was in fact net rent, meaning the amount just going to the landlord for use of the space.

Star Tribute reports that this means that the real estate market downtown, in the city center, may not be that cheap after all.  Furthermore the column mentions that renting office space in Minneapolis is not cheaper than renting in Pittsburgh, Cleveland and other so-called secondary markets.

In conclusion, Star Tribune reports that even if it was CBRE's error, it should not have been reported as a fact and therefore counterintuitive figures that report Minneapolis to be cheaper should be questioned even if it was coming from a big firm such as CBRE.


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