Share

October 18, 2016

From Target to 3M, Minneapolis is home to 17 Fortune 500 corporations: blue-chip firms that aren’t often associated with the tech sector. However, much of the market’s investment appeal is credited to the fact that a significant number of these companies have growth tied to the tech side of their business. According to JLL’s U.S. Technology Outlook, total venture capital funding from Q3 2015 to Q2 2016 reached $168.8 million, a 55 percent year-over-year increase.

“When investors look at Minneapolis’ office market, they see growth as well as stability,” says Steve Buss, Managing Director with JLL’s Capital Markets. “Globally, yields are low and in gateway markets, they’re compressing – secondary markets offer attractive risk-adjusted returns.”

With UnitedHealth Group’s Optum division and St. Jude calling Minneapolis home, healthcare and medical technology serve as major tech drivers in the market. Combined with companies less commonly associated with technology, including those in manufacturing, retail and banking sectors, technological innovation drives a diverse mixture of industries.

The surge of tech growth begets the need for a deep talent pool. According to JLL research, 40 percent of Minneapolis’ population holds a bachelor’s degree or higher; New occupiers who continue enter the market or expand their presence will be drawn to that reservoir.

“Minneapolis offers a high quality of life and compared to traditional, coastal tech hubs, a lower cost for office and multifamily real estate. All of this bodes well for investment resilience,” says Buss.

Tech tenants are commonly associated with the North Loop submarket’s brick and timber buildings, and Buss notes the office building renovations and conversions in the broader Minneapolis office market are still in the early stages. In addition, 2016 is anticipated to potentially top record total sales volumes, with plenty of investors drawn to the CBD.

Two noteworthy recent trades include the $82 million sale of Plaza Seven Tower (to be renamed PwC Tower) and the $200 million sale of Ameriprise Financial Center.

“Large, high-quality assets are attracting bids from investors who in the past sought out investment opportunities in markets like Chicago and San Francisco – it really demonstrates the institutionalization of Minneapolis,” says Buss. “Increasingly, international investors from Germany, Canada, the Middle East and Asia are demonstrating their interest in the market.”

With sound fundamentals and a unique mix of companies expanding tech presence and innovation, Minneapolis is primed to continue to rise on investors’ radars.

Download JLL’s U.S. Technology Outlook

Steve Buss
Managing Director, JLL Capital Markets

Share

Never miss an update from The Investor.

Subscribe Now!