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Commercial Department: Spotlight: Minnesota: May 2017


Spotlight: Minnesota

The Gopher State is a land of lakes and thriving business.

The Land of 10,000 Lakes, as Minnesota is often called — actually it’s 11,842 lakes — has a colorful history as a fur-trading outpost first explored by the French in the 1600s, followed by the British, who sought beaver pelts to make hats for Europeans of the time.

Following the British came a wave of Scandinavian and German immigrants who settled in Minnesota in the 1800s, which has given the state a distinct Nordic cultural flavor — explaining the popularity in Minnesota to this day of Lutefisk, a lye-treated dried whitefish with a jelly-like consistency that is a traditional dish in Sweden and Norway.

Minnesota also is home to the original inhabitants of the land, the Dakota and Ojibwe indigenous tribes, who still live in the state in large numbers. In fact, the state’s major city, Minneapolis, is home to one of the largest urban concentrations of Native Americans in the nation.

The state’s $328 billion economy, as measured by its gross domestic product (GDP), is driven by a vibrant manufacturing sector. It accounts for more than 14 percent of Minnesota’s GDP and is fueled by some 8,000 manufacturers that produce a range of products, led by computer/electronic and food products. Major manufacturers calling the state home include Cargill, General Mills, 3M, St. Jude Medical, Medtronic, Hormel Foods and Land O’Lakes.

The Gopher State, another nickname for Minnesota, also has a strong health care and bioscience sector, representing about 9 percent of GDP as well as a robust finance and banking sector, accounting for nearly 8 percent of GDP. The state is home to the internationally renowned Mayo Clinic and the University of Minnesota, a major research institution that in 1952 was the site of the first successful open-heart surgery.

Minnesota also ranks third nationally in the number of banks operating within its borders. It is home to Minneapolis-based U.S. Bancorp, one of the top lenders in the nation as measured by asset size.

Another claim to fame for the Gopher State is the Mall of America, which features 2.5 million square feet of retail space. The state’s largest city, Minneapolis — a sister city to the state capital, St. Paul — also boasts a downtown skyway system that stretches eight miles in total and represents one of the largest indoor pedestrian-walkway networks in the world.

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Minneapolis/St. Paul Office Market

c_2017-05_Spotlight_chart1As a sign of the overall strength of the market, rents have been increasing and vacancy rates declining, for the most part, over the past several years in the Minneapolis/St. Paul market, Minnesota’s largest metro area — also referred to as the Twin Cities. There was a slight uptick in vacancy rates and a significant drop-off in net space absorption last year, however.

Net absorption in the Twin Cities market declined from more than 800,000 square feet in 2015 to a negative 72,474 square feet last year, according to JLL’s most recent market report.

The uptick in vacancy rates and the falloff in net absorption are due, in part, to some large tenant moves and new office space coming online during the period. Wells Fargo, for example, vacated some 300,000 square feet of Twin Cities’ office space last year to move into two new downtown Minneapolis office buildings with a total of 1.1 million square feet of space.

Focus: Bioscience

Minnesota’s bioscience industry operates across multiple platforms, including medical devices, biomaterials/biofuels, bio-agriculture and pharmaceuticals. The state is a national leader in medical-device patents and in bioscience-related patents in general, according to the Minnesota Department of Employment and Economic Development (MDEED). Among the private companies that are part of Minnesota’s bioscience muscle are Medtronic, St. Jude Medical, Cardiovascular Systems Inc., Ecolab and corporate giants like 3M, Cargill and General Mills.

The state’s bioscience sector is driven by the Mayo Clinic, which performs cutting-edge research and clinical studies, many of which lead to important new products and therapies. In addition, the University of Minnesota operates the Biomedical Discovery District, which is a complex of facilities focused on advanced research that works in conjunction with the university’s Biotechnology Resource Center and its Office for Technology Commercialization.


c_2017-05_Spotlight_chart2Minnesota’s unemployment rate has consistently tracked below the national rate over the past 10 years, according to figures from the U.S. Department of Labor. U.S. unemployment peaked at 10 percent in 2009, during the height of the Great Recession. Minnesota’s unemployment rate, by contrast, remained 2 to 3 percentage points below that mark, hovering around 7 to 8 percent for the period. As of this past December, The U.S. unemployment rate stood at 4.7 percent while Minnesota reported a 3.9 percent jobless rate.

Health care is the largest employment sector in the state, representing 18 percent of all private-industry employment, according the MDEED. It is followed by manufacturing, which accounts for 13 percent of private-sector employment statewide. Retail trade holds down the third slot, representing 12 percent of Minnesota’s private-sector employment, MDEED data shows.

Sources: Annie E. Casey Foundation, City of Bloomington, Colliers International, Department of Commerce, Department of Labor, Destination Medical Center Corp., Duluth Economic Development Authority, Enterprise Minnesota, Explore Minnesota, Forbes, JLL, Mayo Clinic, Minnesota Compass, Minnesota Department of Employment and Economic Development, NorthMarq Capital, Star Tribune, University of Minnesota

3 Cities to Watch


Part of a metro area that also includes the city of Superior, this city of some 86,000 residents shares one of the major ports on the Great Lakes. The port, located along the western-most tip of Lake Superior, is a major shipping center for coal, iron ore and grain. Some $180 million in downtown development projects have been recently completed or are planned, including the new $80 million headquarters for women’s clothing-store chain Maurices unveiled last year, according to the Duluth Economic Development Authority.


c_2017-05_Spotlight_cityThis city of 112,000 located some 80 miles south of Minneapolis-St. Paul is home to the world-renowned Mayo Clinic, which has an estimated $9.6 billion economic impact on the state of Minnesota, according to the nonprofit Destination Medical Center Corp. The Mayo Clinic’s facilities and the hotels, restaurants and retail outlets that serve the population drawn to the city by the health care center’s services comprise most of the city’s downtown. Ranked by U.S. News & World Report as the best hospital in the nation in 2016-17, the 1,243-bed Mayo Clinic hospital has in excess of 54,000 admissions annually.


This city of 85,000 located in the Twin Cities metro area is home to the landmark Mall of America, the largest indoor shopping center in the U.S., with more than 500 stores and a range of entertainment venues ranging from nightclubs to an amusement park. The mall, according to the City of Bloomington, attracts some 40 million visitors annually — which explains why there are more than 40 hotels within the city’s limits. The city also is home to the Minnesota Valley National Wildlife Refuge, which encompasses 14,000 acres and features miles of hiking and biking trails.

What the locals say

“Just about all signs for our office market are pointing in the right direction. We’ve always had low unemployment. We have a very educated workforce and a big corporate presence — a lot of Fortune 500 companies and a lot of really large private companies. I think part of what is helping Minneapolis specifically is a trend of suburban companies relocating into more urban areas. And a lot of housing has been created in both Minneapolis and St. Paul, so both downtowns have a good population right now. Barring some global issue … generally we see more of the same ahead.”


Dan Trebil 
Managing director, NorthMarq Capital,


Bill Conroy is editor in chief of Scotsman Guide Media. Reach him at (800) 297-6061 or

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