A low vacancy rate and soaring demand. It’s all led to a booming industrial market in the Minneapolis/St. Paul area.
Avison Young recently released its second quarter industrial market report for the Twin Cities area. In little surprise, the report was filled with good news for the region and this sector.
Industrial has been surging since the start of the COVID-19 pandemic. Consumers are ordering more products online, and they expect these products to show up at their doors quickly. Because of this, companies are on the hunt for new distribution and warehouse space.
This trend has benefitted the industrial market throughout the country. And the Twin Cities area, as the Avison Young report shows, is no exception.
According to Avison Young, the vacancy rate for the Twin Cities industrial market stood at 3 percent in the second quarter of this year. That’s especially impressive when you consider that construction activity is high in this sector, too. Even with new building, the industrial sector has maintained its low vacancy rate.
Avison Young says that overall leasing activity in the industrial market has soared during the pandemic, too. In fact, Avison Young predicts that industrial leasing in the Minneapolis/St. Paul market will hit an all-time high by the end of 2021. The company is predicting that the industrial market here will see 11.4 million square feet of space leased this year, a significant jump from the 8.2 million square feet of space leased in 2020.
Because of high demand, industrial properties are now fetching higher prices per square foot in the Twin Cities market. Avison Young says that the average price for industrial assets has risen by 32.4 percent from April of 2020 to June of this year. The average price per square foot for industrial has hit $89.22 in the Minneapolis/St. Paul region, according to Avison Young’s report.
This doesn’t mean that the pandemic hasn’t brought some challenges to the local industrial market. The Minneapolis/St. Paul metropolitan area lost 1.4 percent of its industrial employment since the start of the pandemic. However, the market has recovered 4.6 percent of those losses during the past four month, a good sign for the market.
Overall, the pandemic caused 215,000 job losses in the Minneapolis/St. Paul market between February and May of 2020. Since reopening efforts began, though, the local economy here has added 7.2 percent of those jobs back.
