CRG, the real estate development and investment arm of Clayco, is set to make history in Minnesota this year when it starts construction on its new industrial project, The Cubes at French Lake.
When complete in 2022, this project will bring up to 1 million square feet of distribution space to a 65-acre site in Dayton, Minnesota, about 20 miles northwest of downtown Minneapolis. Notably, the Cubes at French Lake will rank as the largest speculative industrial facility developed in Minnesota once construction wraps.
Jeff Lanaghan, senior vice president and partner for the Midwest region of CRG, said that the time was right for his company to tackle its first super bulk inventory distribution facility in Minnesota. He said that CRG had been looking closely at opportunities in Minnesota for more than a year before the COVID-19 pandemic put its plans on hold.
But today? The pandemic only reinforced how important it is for companies to have plenty of distribution space in the United States. And that has made the already strong Minnesota industrial market even hotter.
“The industrial market is so strong today,” Lanaghan said. “People saw what happened at the beginning of COVID. It was difficult for companies to get their products to their customers. They know now how important it is to get their products onshore. They know that if they are going to service their clients, they need to have their products in house and close to their clients’ locations.”
The Cubes at French Lake, which will be located at 11500 Lawndale Lane in Dayton, will feature 40-foot clear heights, wide staging bays with grade-level doors, a concrete truck court with 185-foot depth, ESFR fire sprinkler systems and LED lighting.
Lee & Associates will handle leasing for the project, which, in addition to offering spec space, will also be marketed as a build-to-suit opportunity.
“We’re thrilled to be marketing The Cubes at French Lake, and we consider this project to be the premier industrial development in the state,” said Chris Garcia, principal at Lee & Associates, in a statement. “The surge in e-commerce has rapidly increased demand in the Twin Cities, and today’s users are looking for next-generation facilities that give them the flexibility and scalability needed to keep pace with the market.”
Lanaghan said that two factors made this the right location for CRG’s project. First, there’s the strong highway access. A new interchange is set to open later this year off Interstate-94 in Dayton. This means that the highway will, as Lanaghan said, nearly come to the front door of the Cubes at French Lake.
Then there’s the labor market in this part of Minnesota. The labor market here is especially strong, Lanaghan said, and people are ready to work.
“During COVID, it was easy to forget that there was very low unemployment in this part of Minnesota,” Lanaghan said. “That is going to come back as people get ready to reenter the workforce.”
CRG’s commitment to the area is yet more evidence of how strong Minnesota’s industrial market has been before and during the pandemic. The future looks bright for this commercial sector, too, as the online shopping habits that even more people developed during the pandemic have fueled even more growth in industrial.
“A lot of people haven’t felt comfortable going to stores during COVID,” Lanaghan said. “We saw a whole new generation of people who never would have thought about ordering online before the pandemic suddenly start buying groceries, food and other items online. They found out that ordering online is pretty easy. I think that opened a lot of people’s eyes to how easy online shopping can be.”
That leaves one big question: Will all these people who embraced online shopping during the pandemic continue to order online as COVID-19 cases taper off and physical stores drop their mask requirements?
That’s difficult to predict. But Lanaghan said that he expects online sales to only continue to increase, and that this ecommerce growth will inspire companies to continue opening new distribution centers across the country.
“For certain things, such as clothing, online shopping might slow down,” Lanaghan said. “But for other types of shopping, such as grocery? People will continue shopping online. It is so easy, there is no reason for people to not do it.”
CRG is betting that the demand for online shopping means that the Cubes at French Lake will fill with tenants quickly. CRG is working with the city of Dayton now and expects all entitlements to be set by early to mid-summer. The plan is to begin construction in the early fall and deliver the completed project late in 2022.