Industrial product has seen excellent growth in the Minneapolis - St. Paul marketplace over the past five years considering the Twin Cities metropolitan is a quintessential linear real estate market. Surely, the volume of construction or soaring prices are not rivaling the current activity in many southern or western metropolitans, but the spike in industrial land sale transactions are profound.
The dataset examined includes a collection of industrial land sales that have either since delivered construction or are presently under construction. Also, the Industrial properties consist of all product subtypes, including single and multi-tenancy, and build-to-suits.
The four-year period between 2016 and 2019 exhibited a steady land sale average of $3 price-per-square-foot, with few outliers on both sides of the high and low spectrum. High occupation rates upon completion of industrial product in 2016 and 2017 were a constant trait, thus leading to the increase of demand seen in 2018 and 2019. Developers were quick to break ground on construction to meet this competitive industrial landscape.
However, when the pandemic began in early 2020, the immediate impact forced the populous to shut down their businesses, schools, and places of entertainment. This began a new shift for consumers from balanced shopping habits of e-commerce and brick-and-mortar stores to principally e-commerce. Acknowledging the fact that the market needed more manufacturing and wholesale options closer to home, this created a noticeable jump in land prices.
In 2020, the price-per-square foot rose to $5 on average, based on eight properties in the imminent construction pipeline. The Minneapolis – St. Paul metropolitan doesn’t have many infill options to begin with, pressuring developers to build out in sprawling suburbs where the most desirable land is higher priced. Forecasting planned development for 2021 based on recent land transactions seems to be on last year’s pace. The market remains tight, favorable for landlords, where tenants seek better class, high-ceiling product.
For more information regarding the industrial market growth in Minnesota, please contact our market researcher, Andrew Brick at Andrew.Brick@ngkf.com
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