Minneapolis – St. Paul Industrial Insight | Q1 2017
Tenants are upgrading space and moving closer into cities while costs remain
The Minneapolis –St. Paul industrial market experienced negative absorption for the first time in tracked history. A number of firms occupied build-to-suit (BTS) facilities at the end of 2016 and are just now exiting their old space. Star Exhibits vacated 184,000 square feet in Brooklyn Park after they moved into 200,000 square feet at NorthPark last quarter. Wagner Spray vacated 116,000 square feet as they moved into their own 170,000 square feet BTS facility in Duke’s Gateway North Business Center in Otsego. Steamworks vacated two buildings in Arden Hills to consolidate in their 88,000 square feet BTS facility in Blaine.
The largest absorptions in Q1 occurred in buildings no older than 1-2 years, and all were in the Northwest submarket. This includes Spears Manufacturing occupying 142,000 square feet at Dayton Distribution Center (built in 2015), Intereum with 134,000 square feet at the Waterford Innovation Center (built last quarter), and Creative Apparel with 117,000 square feet at Red Rock Business Park (built in 2015).
Watch for more infill investment in 2017. Hyde Development has been busy at the Northern Stacks site in Fridley. Buildings III and IV are currently underway, both with significant preleasing. VstarEntertainment Group recently signed for a 105,000-square-foot lease at Building IV.
The largest industrial project currently under construction is United Properties’ 402,000-square-foot BTS bulk warehouse for Distribution Alternatives in LinoLakes. The Pohladfamily-owned development firm is also constructing the Mendota Heights Business Park, which encompasses nearly 100,000 square feet of office showroom. Approximately half is preleased by Kendell Doors. Scannell, UP, Launch Properties, Liberty, Industrial Equities, Opus, Ryan, Duke, and Buhl Investors all have more planned developments in the pipeline.
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For more information, contact: Carolyn Bates | email@example.com