Demand has soared for industrial real estate across the country. And this sector has been especially strong in the Minneapolis-St. Paul market, according to the latest research from Colliers.
The numbers from Colliers’ first quarter 2021 industrial report tell the story: According to Colliers, the Minneapolis-St. Paul industrial market finished the first quarter of 2021 with a low vacancy rate of 4.13 percent and 857,000 square feet of net absorption.
The warehouse and distribution end of the market was especially strong, boasting 500,000 square feet of positive net absorption during the first quarter of the year.
Developers have taken notice of the strength of this market. Colliers reports that 2.3 million square feet of industrial space was under construction in the Twin Cities region as of the end of the first quarter.
The first quarter of the year also saw several large industrial deals in the Minneapolis-St. Paul area. That includes a 156,000-square-foot lease at Northpark V in the Northwest submarket, a lease of 142,000 square feet in the Highway 55 Distribution Center in the region’s South Central submarket and a 110,000-square-foot lease at 610 Junction in the Northwest submarket.
Expect demand for industrial space to continue to rise, too. As Colliers reports, industrial spaces of 20,000 to 50,000 square feet are in short supply.
Because of rising demand and a relatively limited supply, Colliers expects the industrial market in the Twin Cities to remain strong throughout 2021 in both investment and leasing. Colliers says that both speculative and build-to-suit construction will remain steady, though new construction might be constrained by a lack of available land in the inner submarkets.
In little surprise, Amazon has had a significant impact in the Twin Cities industrial market. Colliers says that the online retail giant, which already has several large distribution centers in the Minneapolis-St. Paul area, is expanding its market footprint with a 750,000-square-foot distribution center in Lakeville, Minnesota.
Other retailers are striving to keep pace with Amazon. That’s partly why both Target and Walmart are building new distribution centers of their own throughout the region.
As Colliers says in its report, the impact that Amazon has on markets is impressive. The company’s presence in a market brings with it new competition while raising the bar for existing competitors, Colliers says.