Duke Realty: Booming business at Gateway North Business Park just more proof that Twin Cities’ industrial market is on the rise

Duke Realty is now building a build-to-suit warehouse for Room & Board at the Gateway North Business Park.

Duke Realty is now building a build-to-suit warehouse for Room & Board at the Gateway North Business Park.

by Dan Rafter

The Gateway North Business Park in Otsego, Minn., has kept Duke Realty Corporation busy.

And to Duke officials, the steady flow of build-to-suit activity here is just one more example of the growing strength of the Minneapolis-area industrial market.

“There have been articles about this for a few years now, but there is a lack of bulk modern warehouse space in the Minneapolis/St. Paul market,” said Josh Budish, vice president of leasing and development for Duke Realty Corporation. “The type of modern space that we are building at Gateway North is the type of product that a lot of users are looking for.”

In the latest example of this, Duke in late summer closed a long-term lease with Blu Dot, a designer and distributor of modern furniture, for a 150,064-square-foot build-to-suit warehouse in this business park that sits about 30 miles from Minneapolis.

But that’s just the latest big build-to-suit deal that Duke has closed in Gateway North. In July of this year, Duke signed furniture retailer Room & Board to a long-term lease for a new 485,804-square-foot warehouse in the park. And in January, Duke reached a deal with Des Moines, Iowa-based Ruan Transportation Management Systems for a new 300,000-square-foot distribution center.

The Gateway North Business Park in Otsego, Minn.

The Gateway North Business Park in Otsego, Minn.

Duke Realty now has 935,000 square feet under construction in the park.

Duke, of course, isn’t the only real estate company in the Twin Cities market that is seeing a steady increase in industrial activity. Just recently, the Opus Group signed a contract with Capp Industries, Inc. to design and construct a 121,000-square-foot speculative warehouse and distribution facility in Shakopee, Minn., another community located just more than 30 miles from Minneapolis.

And First Industrial Realty Trust, Inc. has started construction on the development of two facilities totaling 239,000 square feet at the Interstate North Business Center in Brooklyn Park, Minn.

First Industrial will build a 142,290-square-foot facility suitable for a single user or up to three tenants. The company is also developing a 96,764-square-foot build-to-suit facility for Goodwill-Easter Seals Minnesota that will serve as a donation-processing and storage center and also house a Goodwill Outlet Store.

This activity doesn’t surprise Budish. He’s seen the demand for modern industrial space continue to soar throughout the Minneapolis/St. Paul market. And he’s seen, too, how the lack of this modern space has led to a growing number of spec industrial developments in the Twin Cities area, Budish said.

“There is quite a bit of spec industrial construction going on now,” Budish said. “I personally track this, and there is now more than 2.5 million square feet of spec industrial development in the Minneapolis/St. Paul market. That is a pretty impressive figure.”

Blu Dot’s new facility will sit on 7.69 acres, and will feature 32-foot clear heights, 14 dock doors, one drive-in door and 45-foot-by-50-foot column spacing. The company is keeping its options for future expansion open, too; a parcel sitting immediately adjacent to the building can accommodate a 116,000-square-foot expansion if Blu Dot should need it.

“Blu Dot is a fast-growing company,” Budish said. “It’s critical to them to have the opportunity not just for growth in the building but growth within the park, too.”

Duke Realty now owns more than 1 million square feet of industrial space in the Gateway North Business Park. If Blu Dot, then, needs to expand by even more than 116,000 square feet, the company will have plenty of options in the Otsego park.

“If you look at Blu Dot over the years, it has expanded steadily,” Budish said. “It makes sense for the company to have the options they need to expand at this site.”

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