The Minneapolis-St. Paul market is similar to most around the country in one respect: Demand for industrial real estate here is soaring.
Just consider Avison Young’s third-quarter 2021 Minneapolis-St. Paul industrial market report. According to this report, industrial absorption in the Twin Cities market hit 1.6 million square feet as of the end of the third quarter. That number is already higher than what the Twin Cities market hit for the entirety of 2020.
Leasing volume for the industrial sector was high in the Twin Cities market, too, with Avison Young reporting record leasing in the quarter, a boost of 53.2 percent when compared to this sector’s 14-year annual average.
If you’re looking for signs that the industrial sector here is poised for a strong 2022, too, the Avison Young report provides that. According to the report, 25 industrial properties are now under construction in the Twin Cities market. These properties will increase the industrial inventory here by 5.3 million square feet.
The Northwest submarket is the most active, with 14 projects under development.
Vacancies in the industrial sector are low, too. Avison Young reported that the overall vacancy rate for the Twin Cities industrial market stood at 2.8 percent as of the end of the third quarter.
Base industrial rents are on the rise, too, with Avison Young reporting that industrial base rents have increased by 10 percent since the beginning of the year. This trend shows no sign of slowing, according to Avison Young.
On the capital markets side, industrial investment activity in the Twin Cities rose to $1.9 billion in 2020, a record for the Minneapolis-St. Paul area. As of the end of the third quarter, investment activity for 2021 stood at $1.2 billion. This figure is on track to beat the five-year average of $1.3 billion.