Jeremy Jacobs, Executive Managing Director | North Central Region, Colliers

Invest: sat down with Jeremy Jacobs, executive managing director of Colliers’ North Central Region and market leader for Colliers Minnesota, to discuss key trends, challenges, and milestones in Minnesota’s commercial real estate market, including the impact of economic conditions on industrial, retail, and office sectors.

What have been the key highlights and milestones for Colliers in Minnesota and the Twin Cities?

Colliers MSP enjoyed continued momentum in 2024, with a surge of activity and growth. This year, our local office brokered several of the largest, most significant transactions in the market including GN’s 218,437-square-foot lease for its new North American headquarters and operational center (former Shutterfly space) in Shakopee; Thomson Reuters 1.1 MSF, 180-acre headquarters campus sale in Eagan; and the sale of a 347,000 SF office building also in Eagan. In addition, we grew our team and service offering, adding 15 professionals and boosting our multifamily and retail capital markets platforms. 

Our business was not immune to the macroeconomic trends that drove the economy in 2024, as we too experienced the opportunities and challenges of an unpredictable economic landscape.  When debt markets slowed, so too did new development. For the industrial and retail sectors, this meant available or under-construction space decreased while demand remained steady. With limited new supply and consistently high demand, occupancy rates and rental prices reached unprecedented levels. For instance, industrial rental rates surged nearly 20% year-over-year, marking some of the highest increases in the country. 

On the metaphorical commercial real estate teeter totter – with landlords on one side and tenants on the other – industrial and retail landlords have their feet firmly planted aground. However, the opposite is disproportionally true for most of the office sector. Office landlords exist in ongoing uncertainty with return to work stalled and debt and equity fleeing to safer grounds while tenants continue to grapple with a post-pandemic question, “How much office space is actually needed?”

On everyone’s mind is what happens to unused buildings if tenants don’t return. The answer to that question will likely unfold over the next five to 10 years. Incremental improvement, rather than rapid change, seems to be the realistic outlook for the office market.

How would you assess the market in terms of newly added spaces versus those currently being leased?

Minneapolis’s industrial market spans roughly 380 million square feet, with about 3% of that added annually — or around eight to 10 million square feet of new inventory each year. However, due to constraints in debt markets, we’re now seeing less than 1% of new inventory being added, falling below 3.8 million square feet annually. We anticipate this slowing further next year before gradually recovering as new development resumes.

On the office side, recent developments have focused on “flight to quality.” Tenants increasingly prefer newer, superior spaces, leaving older Class A buildings to compete primarily on pricing — a situation landlords aim to avoid. Out of necessity, many owners of office buildings are contemplating “silver bullet” investments that help their assets avoid commoditization.

Colliers was ranked as the world’s best real estate advisor by Euromoney. What factors contributed to this recognition, and how does it reflect your work in the Twin Cities?

This prestigious award recognizes organizations that are moving the dial through commercial success, as well as commitments to technological advances and sustainability initiatives that are improving the industry. This recognition speaks volumes about Colliers’ global excellence in real estate advisory and client service across markets. At a local level, we continue to complete landmark transactions and deliver on our mission to maximize the potential of property and real assets for our clients. Our talented professionals who lead the market with their expertise and best-in-class solutions are the key to our success.

What progress or new measures have been implemented to attract and retain talent over the past year?

This year, we launched a New Graduate Program across 10 U.S. markets, providing guaranteed salaries for two years, structured training, and senior-broker mentorship. Participants will join existing teams to gain hands-on experience and can earn commissions. This comprehensive program offers young talent a unique opportunity to thrive in the industry.

The response has been incredibly encouraging, attracting a more diverse and highly qualified pool of applicants. This aligns with our goal of competing with top employers to bring in talent traditionally unavailable to our industry.

Given current market conditions, would you classify the Minneapolis-Saint Paul commercial real estate market as more of a seller’s or a buyer’s market?

It depends on the sector. For industrial and multifamily, it’s a buyer’s market, thanks to limited future supply, strong demographics, and a highly educated workforce. However, for office, the situation is more nuanced. Opportunities exist, but investors must carefully assess which properties offer value. For existing office owners, exit strategies are more challenging than in previous years, requiring strategic investment to attract buyers.

Which services or property types have seen the most demand recently, and which do you expect to drive growth going forward?

Our multifamily business has grown significantly, driven by improved investment conditions compared to last year. We’re also seeing increased activity in rural industrial sectors, particularly in food and cold storage, which remain underdeveloped markets with high potential.

Locally, industrial properties continue to dominate demand. For offices, there’s a growing need for sublease representation as sublease space increases. However, we’re realistic with clients about their chances of leasing smaller spaces amidst high competition.

Have recent market challenges influenced how you advise your clients?

Yes, particularly in the office sector. We now emphasize the importance of assessing landlords’ financial stability, especially regarding tenant improvement allowances. If landlords lack liquidity, tenants must decide whether to self-fund improvements or pursue other options. We’ve also seen creative solutions like incorporating self-help rights into leases to protect tenants in case of landlord defaults — a concession that has little historical precedent.

What are the primary challenges the industry faces, and how can companies like Colliers address them?

Attracting and retaining young talent is the biggest challenge. The industry is aging, and fewer young people see commercial real estate as an appealing career path. We’re addressing this with programs like our New Graduate Program and Broker Acceleration Program, which provide structured training, mentorship, and network-building opportunities. These initiatives aim to accelerate career growth and make the industry more attractive to emerging professionals.

Colliers is committed to innovation and people-focused strategies. By investing in talent and embracing creative solutions, we’re positioned to thrive despite industry challenges.