While the Minneapolis-St. Paul industrial market remains a strong one, the sector does face challenges, according to a third-quarter report from Transwestern.
In its third quarter Minneapolis-St. Paul Industrial Market report, Transwestern said that the vacancy rate for the Twin Cities area in the third quarter of 2025 stood at 5.4%. That’s a slight jump of 0.4 percentage points from the previous quarter while remaining unchanged on a year-over-year basis.
What’s behind the slight bump in vacancy? Transwestern said that it was primarily driven by a net increase of 678,000 square feet of vacant space in warehouse/office properties in the Twin Cities market during the quarter.
In another key stat, Transwestern reported that net absorption totaled negative 354,237 square feet in the Twin Cities industrial market in the third quarter. Three major tenant move-outs contributed to 965,000 square feet of vacated space, including Sportsman’s Guide leaving behind 422,727 square feet at 411 Farwell Ave. in Saint Paul, Lumbermen’s Inc. vacating 177,935 square feet at Cottage Grove Logistics Park and Hunt Electric leaving behind 160,710 square feet at 7900 Chicago Ave. S in Bloomington.
Transwestern reported, too, that asking rents rose 0.7% during the third quarter, reaching $9.96 a square foot. On a year-over-year basis, local industrial rents remained mostly unchanged, increasing by a small 0.1%, according to Transwestern.
Will the region see much new construction? It looks like it. Transwestern reported that the Twin Cities’ industrial development pipeline reached 7 million square feet under construction in the third quarter, more than doubling the volume from the previous quarter.
A key contributor was Amazon, which began construction on a 3.6-million-square-foot distribution center on a portion of the former Thomson Reuters campus at 701 Opperman Drive in Eagan, Minnesota.
What hasn’t changed is that sales activity remains muted. Transwestern reported that industrial sales volume in the Minneapolis-St. Paul market in the third quarter totaled $272.6 million, down 44% from $487.6 million in the same quarter last year.
This doesn’t mean that there weren’t big industrial deals here. That includes Hyde Development’s $57 million acquisition of the Minneapolis Southeast Core Logistics portfolio, a portfolio made up of 8210–2360 Courthouse Blvd. in Inver Grove Heights and 2999 Ames Crossing Road in Eagan. Hyde purchased the portfolio from United Properties.
