Worries about an uncertain economy? Concerns that higher interest rates might cause companies to pause their expansion plans? Neither of those headwinds have stopped Minneapolis-based commercial real estate firm Ryan Companies from pushing ahead with its latest project, a pair of speculative industrial buildings in the 610 Zane Business Park in Brooklyn Park, Minnesota.
Construction started on the pair of industrial facilities in early April, with an expected completion date in October or November of this year. The two buildings will bring a total of 325,000 square feet of new industrial space to the Twin Cities market.
It’s not surprising that Ryan Companies is bullish on spec industrial space. The industrial vacancy rate for the Twin Cities market stood at 2.6% in the first quarter of this year. That’s a sign that demand for industrial space remains high.
Dan Mueller, vice president of real estate development with Ryan Companies, said that the spec industrial buildings are just the latest additions to the mixed-use 610 Zane Business Park that the company started developing several years ago.
The first addition to the park was a Hy-Vee grocery store that opened in 2016. To bring this project to fruition, Ryan worked with the city of Brooklyn Park to rezone a portion of the site. The 100,000-square-foot flagship store features a full grocery, Market Grille restaurant, pharmacy, wine and spirts store and convenience store with a drive-through Starbucks.
That first addition to the park was key, Mueller said.
“The Hy-Vee is a nice anchor to the development,” he said. “It’s a nice amenities hub for the business park’s tenants. We have sidewalks that connect all the tenants to the Hy-Vee and the ancillary retail that has been developed around it.”
Today, the Hy-Vee portion of the development features retailers such as Chipotle, Jersey Mike’s and a Taco Bell, which give the business park’s tenants easy access to a quick lunch.
The business park also features a single-tenant build-to-suit space for Star Exhibits, a marketing company; the corporate headquarters building of water-treatment company Kurita America; and a medical office development anchored by PrairieCare.
Mueller said that the addition of the two spec industrial buildings will continue the momentum that Ryan has seen at this business park. And he’s not worried about filling the space once it hits the market.
“There is always concern when you are building on a spec basis,” Mueller said. “But we felt confident in the strength of the industrial market in this area. That was the main driver for this project: We are bullish on the strength of the Northwest submarket of the Twin Cities region.”
Why is demand so strong for industrial product in the Twin Cities region and especially in the Northwest submarket? And what makes the 610 Zane Business Park such an attractive location for tenants, a park in such demand that Ryan was willing to take on the risk of building two industrial facilities here?
Mueller doesn’t hesitate to point out the positives of the 610 Zane Business Park. The park boasts plenty of access to transportation. The buildings in the park are functional, modern and laid out well.
Then there are those retail amenities, including the Hy-Vee grocery store. These retail offerings are a short, sidewalk-connected, walk from the land that will house the two new speculative industrial buildings.
“Outside of the typical locational items that make for a good business park, we have those additional amenities that are unique,” Mueller said. “Industrial employers are fighting the battle for talent like everyone else. If you have something unique to offer employees, such as a good quality building and some convenience or other amenities, that helps attract and retain talent.”
The new industrial buildings will feature 32-foot clear heights, ample truck loading areas and plenty of car parking. Ryan is willing to subdivide the space so that tenants of all sizes can move in.
“We want to cast a wide net to tenants,” Mueller said. “These buildings could work with anything from manufacturing to light industrial tenants. Anything that is warehouse-related would be set up nice here.”
Mueller said that he expects the new industrial buildings to attract plenty of attention from possible tenants.
“The demand for industrial space here is still extremely strong,” Mueller said. “Depending on which brokerage company you talk to, there are 10 million to 13 million square feet of total active tenants seeking space. Vacancy is still incredibly low, 2% to 3%. Those are all very good signs of a market with healthy demand.”