Blame high interest rates, economic uncertainty and slowing demand, but whatever the reason, spec construction has slowed to a crawl in the industrial sector. But there are exceptions. That includes The Opus Group, which is building its own speculative industrial project in Minneapolis’ northwest market.
The Opus Group on July 8 began construction on a distribution and light manufacturing facility in Dayton, Minnesota, about 30 miles from the Twin Cities. The 132,200-square-foot speculative facility is rising at 17600 Territorial Road in Dayton, a 10-acre site easily accessible from the new Dayton Parkway Interchange and Interstate 94.
And further bucking the slowdown trend, the new facility has already landed a major tenant. TurbinePROs, a leading North American provider of field services for rotating equipment manufacturers, has signed a lease for more than 87,000 square feet at the facility. This leaves about 44,000 square feet available for lease.
Joe Mahoney, senior director of real estate with Opus Development Company, said that Opus long had confidence in the site’s location. The opening of the Dayton Parkway Interchange, though, only enhanced the location.
As Mahoney said, Rogers and Maple Grove both already had their own interchanges. It was time, too, for Dayton to get its access point.
“For a long time, Dayton tended to get skipped over when new development was being planned for the area,” Mahoney said. “Having this interchange has helped unlock this area for industrial projects. That interchange is key to unlocking the available parcels in Dayton for future development.”
The Dayton Parkway Business Center will offer tenants 19 dock doors, expandable to 34; four drive-in doors; a clear height of 28 feet; 136 vehicle parking stalls, expandable to 177; and 14 trailer parking stalls. Additional amenities include natural lighting, motion-activated occupancy sensors and a solar-friendly roof.
TurbinePROs needed a space near the interstate, a need that the Dayton Parkway Business Center met. Because the company signed up for the development so early, Opus was able to construct the property around its needs.
“They were in Rogers a bit further from the interstate. Now they are closer to the interstate and they were able to customize their space,” Mahoney said. “Their business is growing, and they were able to find a solution to help them advance their business.
Why was this the right time for Opus to build, considering the high interest rates and economic uncertainty hitting the country today?
Mahoney said that the Dayton Parkway Business Center will serve a largely underserved niche, end users looking for space that is smaller than bigger bulk-type warehousing.
And higher interest rates? They are challenging. But by landing a tenant before construction even began, Opus gained the confidence that the time was right to begin construction on the Dayton facility.
“Interest rates are making new construction more challenging,” Mahoney said. “Getting that pre-leasig done helped push the project forward. We have always been gearing up for a construction start this summer. Having that lease in place gave us the confidence that we needed to move ahead.”
Mahoney is confident, too, that demand will be strong for the facility’s remaining 44,000 square feet. There are few blocks of space at that size in the Minneapolis-St. Paul market, he said.
“We are confident that we will find a tenant for that remaining space,” Mahoney said.
Opus is the developer, design-builder, architect and structural engineer of record on the project. Dan Swartz and Austin Lovin of CBRE are marketing the space for lease.
The Dayton Parkway Business Center is slated for completion in early 2025.
“The Twin Cities northwest industrial submarket continues to lead and outperform the balance of the metro with active users and strong demand. The desirable location and ease of access with the addition of the Dayton Parkway Interchange has only increased that activity,” said Nick Murnane, vice president and general manager of real estate development with Opus, in a statement.
“With this facility, we will have the ability to provide a unique offering for users who require smaller footprints in a submarket that has been dominated by larger spaces.”
