Minneapolis Residential Housing Trends In Home Offices

Observing shifts in Minneapolis housing trends helps Minneapolis real estate sellers make better decisions to appeal to the needs of Minneapolis - St. Paul homebuyers. Current housing data offers trends in how Minneapolis home builders are allocating a home's space in Minneapolis new construction.

One 2013 Minneapolis Housing Trend was Impacted by the Fact That More Minneapolis Home Office Hours are Embraced by Employers and Twin Cities Commercial Office Space Needs are AdjustingMinneapolis Housing Trend Shifts to More Home Office Hours

Twin Cities commercial real estate data shows that the physical footprint for office workers is shrinking due to the shift in demand for the type and amount of office work space. Per-employee office space is likely to continue shrinking, as cloud computing evolves. Additionally, housing research that surfaced in 2013 showed that Millennial home buyers rank living in Minneapolis high and are also spending more hours working from their homes.

Encouraging individuals who find it easier to work from a home office is successfully transforming many business work environments into more flexible hours that save valuable time and money. If you work significant hours from your Minneapolis home office, then your home's office space is an essential room in your layout. For Twin Cities homeowners pondering decisions to remodel and create a home office, the news that more Minnesota residents are looking to work from home indicates that designated home office space may be on the rise. Future Twin Cities homebuyers wish lists more often include technology to have virtual access to what they would have at the office. A spare bedroom, convertible attic spaces or your basement will make a great space for a home office.



The Shenehon Center for Real Estate at the University of St. Thomas Opus College of Business recently highlighted a key Minneapolis - St. Paul housing trend in a commercial real estate office space that is impacting residential housing. The Changing Office Trends Hold Major Implications for Future Office Demand December 26, 2013 article says the real estate industry should start taking a hard look at changes occurring in the office market. UST believes the sift to higher use of home offices and the downsizing of business office real estate space is relevant today and is shaping Minneapolis residential housing trends as well as commercial real estate.

Today, the average business office space allocated to each employee has dropped to approximately 195 square feet. "While some office tenants are hesitating to commit to large leases primarily due to economic uncertainties, the long-term trend is clearly shifting towards efficient space usage," said Brian J. Parthum, who tracks employment and economic trends for Southeast Michigan Council of Governments (SEMCOG) in Detroit. Additionally, office space is more attractive to the next generation of staff when taking advantage of natural light, promoting face-to-face contact, utilizing laptops, wireless technology, and mobile devices that better suit more flexible work environment. "Culturally the new generation of employees is requiring a more flexible and open environment. And in regards to the economics, there is the need for both startups and corporations to lower their burn rate and conserve cash, something that can easily be done by restructuring the way they view their office space," Lewis said.

Following the Webinar, CoStar News interviewed Dr. Miller for a more in-depth discussion of the topic and surveyed a wide sample of Webinar participants to share their firsthand account of the ongoing trend in commercial real estate office space and its implications on how residential homes are more often including a dedicated home office space into layout designs.


More Twin Cities Residents Increase Work From Home and for Longer Hours

UST cites lead 2013 research from Norm G. Miller, PhD, professor at University of San Diego, Burnham-Moores, Center for Real Estate. Miller and other housing experts predict that the trend toward more-efficient use of office space will continue to trend towards using home office spaces and community officing. "I see office demand at the user level falling by about 20% over the next decade. This is actually a more conservative number than I have seen from a lot of other analysts," commented Cassidy Turley’s Garrick Brown. Their research makes a distinction between long-term business trends of using less office space per worker, and overall accommodations supporting work completed from a home office.

Miller and other housing experts are predicting that the trend toward more-efficient use of office space will continue to move Twin Cities housing trends towards how home spaces are used as well as the demand for commercial office space use.

Indications are that along with the national trend, more Twin Cities businesses are adapting to tech models and work both for maximizing business office space and making it easier for employees and freelances to the most out of a home office and reduce travel time. While not every area of business or trade is moving this direction, many for pure logistics sake, for others it is ideal.

The article represents Brown's research showing a distinction between the long-term trend towards businesses using less office space per worker, and overall accommodations put in place to support work being completed from a home office.

For Twin Cities builders, this may mean vacancies or less demand for office space as "the footprints of users will be less and the long-term trend for office demand will be impacted. This trend may not really show up in the stats for quite some time as it will be masked by the general uptick in office demand," states Brown.

Furthermore, the larger percentage of the downsizing is coming from decreased square footage for work office space in a building and not in the amount of public and shared space, which actually is increasing, according to Norm Miller.

Trend In Spare Bedroom Conversions to Home Office Space- Urbanland

Twin Cities builders are finding niche markets for Twin Cities Mellennnial homebuyers. Approximately one-fifth are married, with a mere one-third of the professional individuals this age anticipating having one or more children. Only a minority of homebuyers age 20 - 29 have even one child, and this trend is expected to persist. That influences Minneapolis residential housing trends and home layouts for fewer Twin Cities households with children. More requests are given for converting home layout plans with a spare bedroom to rather use that space for a home office.

Urbanland housing research notes that "higher-income, better-educated echo boomers marry much later and have fewer children than their less-educated peers. Subsequently, many have substituted pets for children". Owning your own home makes often eliminates pet restrictions or added costs when seeking to rent a home that will accomodate pets. Additionally, echo boomers seeking residential housing want easy access to transportation and commuting to work offices. One reason is that many of the young who can afford an automobile prefer to live downtown in the the Twin Cities or mixed-use suburban locations.

Technology Advances Make Working from Home Offices Reasonable

It appears that more and more work environments transitioned from "fluff" in their work environments and took a harder look at office space utilization. For some it may be a new topic; however, with budgets under scrutiny, how commercial offices function and can be maximized has already shown a Twin Cities trend resulting in a cultural shift for the office worker. Miller stated that, "Companies realized they could save money by minimizing excess space. But I believe the single biggest factor driving this trend is technology. Now that we have moved to cloud-based file storage and can access our work from anywhere and it can be easily shared, workers no longer have to be tethered to an office to be productive. Technology is very much at the heart of this transformation."

"There is a major change underway in how office space users are looking at their future office space needs and the utilization of their resisting office space. This is a long term trend that is going to have a significant impact on office space owners, users, and investors." – Herb Tousley, Director of Real Estate Programs, University of St. Thomas

"Some people have always worked from home. And now technology allows them to work on the weekends, at night or on vacation. There is no boundary between work and home anymore." ~ John Challenger, chief executive of the consultancy Challenger, Gray & Christmas


CoreNet Global Report on Twin Cities Office Spaces

Colliers International released the Q3 2013 Minneapolis - St. Paul Office Market Report in August 2013. Conducted by CoreNet Global, it reveals Minneapolis office rate absorption rates, and how longer-term office space demand impacts employer engagement of supporting employment from a home office and office sharing practices. The Minneapolis - St Paul real estate survey, conducted by CoreNet Global for Q3 2013, found that the average space per office worker has dropped globally to no more than 150 square feet from 225 square feet in 2010. Many real estate professionals expect the typical ratio to drop to 100 square feet or less per worker within five years, according to Colliers' report. The Federal Government Telework Report of 2011, Minneapolis housing data rated the metro area as #1 nationally for the number of residents who utilize a home office as their primary place of work.

Improving corporate confidence and positive job stats doesn't necessarily doesn’t automatically equate to strong office absorption. Indicated in the chart provided by Colliers International, office-using employment in Minneapolis-St. Paul has jumped ahead of pre-recessionary levels. In addition, economic growth in the Minneapolis - St. Paul metro was strong at 3.9 percent GDP growth compared to 2.8 percent nationally. Showing tremendous gains in the Minneapolis real estate housing recovery, in contrast to national trends, financial services employment has returned to pre-recession levels, while nationally it is still only about one-third of the way back.

Minneapolis Home Office Space Use Predicted to Rise in 2014

We expect continued modest activity for the remainder of 2013, with overall absorption for the second half of the year slower than the first half. In coming years, there is the possibility of negative absorption as tenants, particularly in the Minneapolis CBD, are due to make moves that reduce their overall occupancy of office spaces. Some of these shifts in Twin Cities office space use aren’t due to take place until late 2014, 2015, and 2016. But due to the strong economic fundamentals of the Minneapolis-St. Paul market and continued financial activities hiring, we expect any dip to be brief, and anticipate longer-term office space demand to be steady, but not as strong as in other recovery periods.


The report states that: "The vast majority of agencies have adopted telework as a critical component of their agency Continuity of Operations Plans (COOP). Use of telework in this capacity will enable our Federal organizations to continue functioning through hazardous weather, pandemic, physical attacks or any other event that would result in the closure of Government buildings". Aboding extended commute times due to hazardous weather certainly is appreciated by many a Twin Cities resident and business owner. Even on fair weather days, the daily drain on productivity that a commute to and from a workplace can impose is quickly recognized. Home improvements incorporating better technology in a home office with video communications reduce need to travel in to a corporate office. Additional savings in emissions, gasoline, fuel costs, and business office space upkeep costs add to the benefits.

On top of commute hours being converted to better-used-work hours, OPM found that the 933 OPM employees who reporting teleworking in 2012 saved an estimated annual:

• $274,500 on gasoline

• 104,000 gallons of gasoline

• 2.4 million commute miles

• 578 MT CO 2 e of greenhouse gases

Across all federal government agencies participating in the telework survey with measurement processes in place, further savings were notable. 31 agencies planning is still underway to measure cost savings and 16 agencies said they have no current means to track savings. In 2012:

13 agencies saved on office space

10 agencies saved on utilities

15 agencies reported human capital savings

5 agencies saved on training

19 agencies saved by reducing employee absences

4 reported transit subsidy savings

Following the federal government report, the Mobile Work Exchange launched ed its new tool December 24th that uses basic information to calculate telework ROI using six commonly identified telework and mobility value factors: transit subsidies, environmental factors, continuity of operations, productivity, employee retention and real estate and utility costs.

Twin Cities Accenture Accommodates Office Space To Suit Interaction Among Workers

One example where business office space diminished and home office spaces increased came from National Real Estate Investor on April of 2013. "Businesses across industries are opting for office space that allows for greater interaction among workers. For example, management consulting firm Accenture completely revamped its offices in Minneapolis last year, replacing cubicles with a flexible floor plan that includes shared workspaces. It also increased its number of meeting rooms and added a café, all to increase collaboration between its employees. In the process, the firm downsized its Minneapolis office from about 70,000 sq. ft. to 41,000 sq. ft."


Using a Home Office as a Business Owner

To qualify to deduct expenses for business use of your home, you must the dedicated office space in your home in a certain manner as set forth by the IRS. To help determine if you qualify for a home office tax deduction, Business owners and freelancers should begin by answering the following questions:

standardized disclosure agreements are basicWhat Amount is Your Home Office is Used? - Exclusively and regularly as your principal place of business (defined later)

disclosures need to cover needed interests Is the Home Office Used for Meetings? - Exclusively and regularly as a place where you meet or deal with patients, clients, or customers in the normal course of your trade or business

standardized disclosure agreements are basicIs a Separate Homeowner Structure Used? - In the case of a separate structure which is not attached to your home, in connection with your trade or business.

Using Your Twin Cities Home Office As A Employee

If you are an employee and you used a part of your home for business during 2013, you may qualify for a tax deduction for its business use. You must meet the above requirements for work tasks on behalf of your employer, and:

disclosures need to cover needed interests Was the Home Office Spaced Rented Out? -You must not rent any part of your home to your employer and use the rented portion to perform services as an employee for that employer.

disclosures need to cover needed interests Extent That the Home Office was Helpful? -If the use of the home office is merely appropriate and helpful, you cannot deduct expenses for the business use of your home.

Download the Colliers International report On Trends in Minneapolis / St. Paul Office Space Usage. pdf

Download the Federal Reserve Status of Teleworking 2011 from the Office Of Personnel Management pdf

Download the Federal Reserve Status of Teleworking 2013 from the Office Of Personnel Management pdf

Contact Home Destination, a Minneapolis metro residential real estate agent helping homebuyers and sellers of Twin Cities real estate properties. Jenna Thuening offershousing resources for buyers and sellers, and ensures individuals can sell or buy a home and make well-informed housing decisions. Call 612-396-7832 for a priority response.

Jenna Thuening, a Jenna Thuening, owner of Home Destination Minneapolis residential Realtor reports on Minneapolis residential housing trends in home offices.

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