Q1 2021 Industrial Market Insight Report

Market Trends

1.) The industrial market continues to be the most resilient sector in commercial real estate and remains the most sought-after product type for investors both nationally and locally.

2.) Speculative developments have gained momentum as demand for industrial/flex space continues to outpace supply. A large up-tick in development activity is expected to be seen in upcoming quarters.

3.) As more institutional investors seek to grow their portfolios in the Twin Cities industrial market, we will likely see asking rents begin to increase in the coming quarters. The current market dynamics are favorable for landlords and this will likely continue for the foreseeable future.

4.) E-commerce continues to be the driving force behind the industrial sector’s strong demand. The pandemic amplified the already growing trend for online shopping, which has shown no signs of slowing.

5.) Construction costs and lead time have increased due to a global shortage of materials.

Gross Rental and Vacancy Rates

(Click to enlarge)

Market Movement

KSP FulfillmentNorthPark VII221,000 SFNorthwest MetroNew Lease
AmazonHwy 55 Distribution Center142,000 SFSoutheast MetroNew Lease
Anagram5501 W Old Shakopee Road173,000 SFSouthwest MetroNew Lease
Mermon610 Junction Building 1110,000 SFNorthwest MetroNew Lease
Pelican Biothermal10100 89th Ave117,000 SFNorthwest MetroNew Lease

Investment Sales

Platform VenturesLakes Distribution Center265,500 SFNortheast Metro$22 Million
Becknell/Raith Capital Partners8751 Zachary Ln N197,000 SFNorthwest Metro$17.5 Million
STAG Industrial Holdings8450 Courthouse Blvd80,000 SFSoutheast Metro$10.1 Million
Loyal Oak Management14461 Lake Dr NE58,000 SFNortheast Metro$7.4 Million

Minneapolis/St. Paul, collectively referred to as the Twin Cities, is the 16th largest MSA with approximately 3.6 million residents and home to 17 fortune 500 public companies’ headquarters. The Twin Cities is also ranked highly for quality of life, labor force participation, health care, and workforce quality. The Twin Cities’ industrial market consists of approximately 263 million square feet. The Minneapolis/St. Paul Minnesota’s job market continues to recover from the negative impacts brought on by COVID-19. In February 2021 Minnesota’s unemployment rate had improved to 4.4%, roughly 2 percentage points below the national average of 6.2%.