Expect the number of industrial sales transactions to rise this year in the Twin Cities market. Just don’t expect that jump until the second half of 2024.
That’s the big takeaway from JLL‘s fourth quarter 2023 Minneapolis-St. Paul industrial market overview.
JLL is predicting that as interest rates stabilize, investors will once again look to purchase industrial assets in the Twin Cities market. An increase in industrial sales activity won’t take place immediately this year, though, JLL says. Instead, it should occur during the last six months of 2024.
Other 2024 trends? JLL predicts that the pipeline of spec industrial development will shut off after the delivery of an additional 1.4 million square feet of new industrial product in the first quarter of this year.
And with about 8.5 million square feet of user demand in the market, JLL predicts that industrial vacancy rates in the Minneapolis-St. Paul market will likely fall throughout the year after peaking in early 2024.
JLL’s report also sums up the end of a turbulent 2023. JLL reported that industrial leasing remained strong in the Twin Cities market during the fourth quarter of 2023, topping 2.1 million square feet. Of that, nearly 500,000 square feet was in new spec buildings.
In notable industrial transactions, JLL pointed to Murphy Warehouse leasing 383,772 square feet at 345 Plato in St. Paul and Alexander’s Mobility Services expanding to 131,761 square feet at the Highway 55 Distribution Center in Eagan, Minnesota.
JLL reported that the Northwest submarket accounted for 28% of 2023 leasing activity, while all three other submarkets each accounted for 24% of leasing activity.
Investment sales picked up somewhat in the fourth quarter of 2023. JLL pointed to Eagle Realty Group’s $88.4 million acquisition of a four-building portfolio and the $33.3 million purchase of Gateway Interstate by Altus Properties as two of the biggest industrial sales in the market during the fourth quarter.
