Can the Minneapolis-St. Paul industrial market heat up even more this year? The latest research from CBRE suggests that it will.
According to CBRE’s latest Marketview report, leasing activity in the Minneapolis-St. Paul industrial market rose 69 percent in the fourth quarter of 2020 when compared to the same quarter a year earlier.
And that’s just the start of the good news: CBRE said that completions of build-to-suits combined with the strong leasing activity of speculative industrial space in the Twin Cities market resulted in nearly 1.2 million square feet of absorption in the fourth quarter.
Vacancies in the local industrial market remained low, too, hitting 4.7 percent as of the end of the fourth quarter.
The COVID-19 pandemic didn’t slow down construction activity, either. CBRE said that nearly 3 million square feet of new industrial space was added to the Twin Cities market in 2020. And in 2021? Don’t expect developers to be quiet. CBRE predicted that more than 2 million square feet of speculative development will break ground this year in the industrial sector.
But which industrial submarkets were especially strong in 2020? CBRE pointed first to the South Central submarket, which saw 31 percent of all the fourth quarter transaction activity. The Southwest submarket was strong, too, accounting for 22 percent of all industrial transactions in the fourth quarter, while the Northwest submarket accounted for 19 percent of all industrial transactions during the last three months of 2020.
CBRE reported that retail was the leading industry type, accounting for 42 percent of activity in the fourth quarter. That, of course, can be attributed to the continued rise of e-commerce and the increasing demand for last-mile delivery.
Investment activity in the Twin Cities industrial market was strong, too. Hana Financial Group made its first Minneapolis-St. Paul acquisition with its purchase of a large e-commerce fulfillment facility now under construction in Lakeville, Minnesota. Opus sold two recently developed buildings in Eagan and Maple Grove.
In other investment activity, Meritex purchased the Airport Industrial Portfolio in Eagan, Vertis Real Estate Capital invested in 3M spinoff Kindeva’s new headquarters under construction in Woodbury and Bix Produce divested its Little Canada facility to W.P. Carey in a sale-leaseback.