How strong is the industrial market in the Twin Cities? The strongest it’s been in a decade.
That’s the takeaway from DTZ’s first-half industrial market report for the Minneapolis/St. Paul market. According to DTZ, the overall vacancy rate of the market’s industrial sector has now fallen to its lowest level in a decade.
DTZ said that the Twin Cities’ industrial market absorbed 500,000 square feet in the second quarter of 2015. Year-to-date, the industrial sector here has absorbed more space than in all of 2014.
Don’t think developers haven’t noticed. DTZ reports that the Twin Cities market has roughly 2.5 million square feet of industrial space currently under construction with construction ready to begin on about 2 million more square feet.
“Most of the industrial market’s absorbed space has been in traditional office warehouse and traditional office showroom buildings,” said Tyler Allen, research analyst in DTZ’s Minneapolis office. “But construction remains hot as some bulk warehouse users have been leaving the multi-tenant universe to own their own build-to-suit facility.”
The overall industrial vacancy rate in the Minneapolis/St. Paul market fell to 9.3 percent by the end of the first half of the year.
Of course, it’s unrealistic to expect vacancies in this sector to drop again in the second half of the year and into 2016. That’s because so much industrial space is now under construction in the Minneapolis/St. Paul market. that is bound to cause vacancy rates in industrial to rise at least slightly.
The Twin Cities has also been home to several big industrial deals this year. Amazon announced that it will begin construction on an 850,000-square-foot distribution center in the Southwest submarket next year, for instance. This distribution center will employ nearly 1,000 people.
Polaris is consolidating some of its local functions into an 850,000-square-foot facility of its own, this one in Shakopee, Minnesota. Nilfisk and Blu Dot have both signed new lease deals in the Northwest submarket for 180,000 square feet each.