Q2 2020 Industrial Market Insight Report

Market Trends

1.) The industrial sector is better positioned to weather the economic complications caused by COVID-19 than any other areas of the economy. This in large part has to do with the rapid growth of e-commerce.

2.) The demand for immediate goods was magnified because of COVID-19. To ensure quick delivery times and fulfill last minute needs, there will likely continues to be an increased demand for industrial space in and near urban areas.

3.) Much like the office sector, there has been an increased emphasis on cleanliness, social distancing, and staggered shifts for warehouse employees. It is expected that more industrial properties will seek WELL certification, which is a designation awarded to buildings that meet a set of requirements promoting employee health, safety, and wellness.

4.) There has been a continued demand for warehouse and cold storage space as companies look to bulk up their inventory in order to increase efficiency.

5.) Rental rates have remained fairly flat during Q2 2020, but are expected to slightly increase, as demand for industrial space remains strong and vacancy rates continue to trend downward.

Rental and Vacancy Rates

(Click to enlarge)

Market Movement

NuAire, Inc2100 Fernbrook Lane170,000 SFNorthwest MetroNew Lease
Kurita America6500 93rd Ave North155,000 SFNorthwest MetroNew Lease
Simpson Strong-TieInverPoint Business Center80,000 SFNorthease MetroNew Lease
Sweet Harvest FoodsLaunch Park100,000 SFSoutheast MetroNew Lease

Investment Sales

Cabot Properties11011 Holly Lane North283,778 SFNW Metro$27.75 Million
PersaudOaks Tech Center IV98,000 SFNE Metro$11.4 Million
MetLife Investment ManagementAmazon Fulfillment Center860,000 SFSW Metro$118 Million
UndisclosedMid-City Logistics Hub400,000 SFMinneapolis (Northeast)$17.4 Million
Global Glove & Manufacturing13601 Tungsten Street NW61,654 SFNW Metro$2.5 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 Minneapolis/St. Paul Office Market started 2020 off
stable with an unemployment rate of 3.1% and projected GDP growth that was expected to continue to outperform the national economy. However, much like other cities of the world, the COVID-19 pandemic has had a significant impact on the economy causing the unemployment rate to spike to 8.6 % as of June 2020. The national average unemployment rate is currently 11.1%.