How strong is the Minneapolis-St. Paul industrial market? Absorption during the first six months of this year totaled about 4 million square feet. And by the end of the year, nearly 10 million square feet of new industrial space will have been delivered in the Twin Cities market.
Those are just two of the highlights from the Minneapolis-St. Paul second quarter industrial report from Colliers. The report highlights a local industrial market that continues to thrive.
According to Colliers’ numbes, the direct vacancy rate for the Minneapolis-St. Paul industrial market fell to 3% in the second quarter of the year. That’s down frm an already low 3.65% a year earlier.
Colliers reported, too, that 3.1 million square feet of new industrial supply was delivered to the Twin Cities market in the second quarter, with more than 4.91 million square feet under construction as of the end of the first six months of the year.
Rents are on the rise, too, with Colliers reporting that the average asking lease rate for industrial space in the Twin Cities market hit $6.50 a square foot during the second quarter. That’s up from an average of $6.32 a square foot in the first quarter of 2021.
Recent industrial transactions include a 90,000-square-foot lease at the Nordeast Business Center in the North Central submarket, a 95,000-square-foot lease at Interstate South in the South Central submarket and sales at the Golden Triangle Corporate Center and Southtech Plaza developments.
The market does face some challenges, though. As Colliers says, rising inflation and interest rates will probably slow investment activity, even in this strong market. The hope, though, is that the Twin Cities market, as has been its history, will be hit as hard by these economic challenges as other markets across the country.
