Q2 2021 Industrial Market Insight Report

Market Trends

1.) As demand for industrial space remains strong across the state, there is an uptick of national development firms entering the Twin Cities market for the first time. One example of this is CRG’s new 1 million square foot development in Dayton.

2.) As available, buildable land in the first and second ring suburbs becomes increasingly sparce, developments are beginning to move further out. Cities like Lakeville, Elko New Market, Dayton, Rogers, Lino Lakes, and Centerville are all seeing an increase in development activity.

3.) Link Logistics (Blackstone) has grown its Twin Cities industrial portfolio significantly in the past few years and is now the largest landlord in the market. As other institutional investors continue to grow their presence in the Twin Cities, we expect to see climbing rental rates.

4.) Due to shortages and disruptions to the supply chain, building materials such as lumber and steel continue to be scarce. The lack of availability has led to a sharp increase in cost, which will likely continue for the foreseeable future.

Gross Rental and Vacancy Rates

(Click to enlarge)

Market Movement

TenantBuilding Size Submarket Type
Anagram5501 Old Shakopee Road172.650 SFSouthwestNew Lease
The Bernard Group3200 4th Ave E155,000 SFSouthwestNew Lease
King Solutions11020 Holly Lane156.200 SFNorthwestNew Lease
State of Minnesota13120 County Road 6179,600 SFNorth westNew Lease

Investment Sales

Link LogisticsPlymouth Ponds Business Park715,000 SFNorthwest$82.3 Million
Investcorp/OnwardI-35 Industrial Center413,239 SFSoutheast$17.2 Million
SOT A-F Owner/Eagle Ridge PartnersShady Oak Business Center304,073 SFSouthwest$19 Million
Link LogisticsPrologis Portfolio2,534,814 SFVarious$246.5 Million
Eagle Ridge PartnersLink Tech Portfolio404,457 SFVarious$34 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 Industrial Market consists of over 264 million SF. As of May 2021, Minnesota’s unemployment rate had improved to 4%, outperforming the US unemployment rate of 5.8%.