How strong is the Minneapolis industrial market? Just consider the number 3.8 million. That’s the amount of square feet the Minneapolis industrial market absorbed during 2019.
This figure comes courtesy of CBRE and its fourth-quarter Minneapolis industrial report. Not surprisingly, considering the strength of Minneapolis’ industrial market, the report was filled with good news.
According to CBRE, the Minneapolis industrial market saw 622,856 square feet of positive net absorption during the fourth quarter of last year. That helped the market hit that 3.8-million-square-foot mark for the year, a figure that represents a solid 18 percent increase from 2018.
The industrial vacancy rate here held steady at a low 4.4 percent, and the overall asking rate for industrial space closed out 2019 at $6.46 a square foot. Both of these, of course, are impressive numbers.
CBRE researchers pointed to the steady employment growth throughout the Twin Cities market as a reason for the strong industrial performance. Minneapolis ended the fourth quarter with the eighth-lowest unemployment rate in the country, 2.9 percent.
“While much of the country was anticipating an economic downturn, the Twin Cities continued to grow economically through the entire year,” said CBRE’s Tom Bennett, first vice president in Minneapolis, in a statement released with the fourth-quarter report. “This consistent growth, along with low vacancy rates and growing demand for industrial properties, created an industrial market with absorption that was amongst the best of the decade.”
In construction, deliveries decreased in the fourth quarter with 431,702 square feet of industrial space completed, down from 993,890 square feet in the thrd quarter. For the year, the Minneapolis industrial market saw 2.2 million square feet of new construction. While deliveries are at their lowest number since 2013, 2020 is set to surpass 2019’s total with 2.9 million square feet of industrial space currently under construction and scheduled to be completed by the end of this year.
Leasing saw a decline with 1.254 million square feet recorded in the fourth quarter, down from 2.4 million in the third. That brought 2019’s total to 8.254 million square feet. The North Central submarket accounted for just under a third of leasing activity at 32 percent, followed by the Northwest submarket at 30 percent.
The largest sale in the fourth quarter was Link Industrial Properties’ purchase of the 2.8-million-square-foot Colony portfolio for $237 million. That portfolio includes 18 properties in the Twin Cities, followed by AEW Capital Management’s purchase of the 472,323-square-foot Minneapolis Core Industrial portfolio for $37 million that includes two properties in Savage and Shakopee, Minnesota.