The industrial vacancy rate in the Twin Cities market dropped to 4.3% as of the end of the first quarter. It’s yet another sign that the Minneapolis-St. Paul industrial market remains strong.
In its first quarter Twin Cities industrial market report, JLL said that the Minneapolis-St. Paul area saw several large industrial leases in the first three months of the year.
Big leases during the quarter included Lumbermen’s lease of 245,949 square feet of new spec industrial space in the Cottage Grove Logistics Park I and Schimberg Company, which leased 102,925 square feet of new spec space at Royal Gateway Commerce Center B.
HM Cragg leased the entire 92,224 square feet of a build-to-suit as part of a two-building redevelopment of the former American Family office campus in Eden Prairie.
While those big leases made headlines, overall industrial leasing activity slowed somewhat during the first quarter, JLL reported. The slowdown, though, was a fairly minor one.
The Northeast submarket led all submarkets in leasing activity during the first quarter, accounting for 37% of leasing activity during this time, JLL reported. The Southeast submarket accounted for 30% of leasing activity in the first quarter, while the Northwest accounted for 23% and the Southwest 10%.
New development activity might soon be rising, too, with JLL reporting that at least five additional industrial projects totaling more than 1 million square feet could break ground in the next one to two quarters.
The demolition of the former Thomson Reuters office building began in the first quarter. The office property will be replaced by a mixed-use redevelopment that will include space for a future Amazon facility.
Investment sales were led by a $99.5 million acquisition by PGIM Real Estate of an 840,000-square-foot Amazon fulfillment center in the Southwest submarket. The quarter also saw the $75 million acquisition by Taurus Investment Holdings of a 16-building, 636,051-square-foot small-bay portfolio.
And how do the numbers look? JLL reported that the Twin Cities market saw more than 1.46 million square feet of net industrial absorption during the first quarter. JLL reported that more than 2.5 million square feet of industrial space was under construction as of the end of the quarter, while 607,502 square feet of new industrial space delivered during the first three months of 2025.
