Trends/Updates in the Industrial Real Estate Market in Minnesota by Newmark
The industrial real estate market in Minnesota has seen notable trends and movements in recent years, driven by various economic factors as well as technological advancements and shifts in consumer behavior. Below are a few of the recent key trends:
Growth in E-commerce:
The rise of e-commerce has significantly impacted industrial real estate, with increased demand for distribution and fulfillment centers. Minnesota has become a regional hub for companies looking to streamline their supply chains and improve delivery times to the Midwest market.
Strong Demand for Warehouse Space:
Driven by the growth of e-commerce and the need for efficient supply chain solutions, there has been a significant upturn in demand for warehouse and distribution space in Minnesota. This trend is further supported by the shift in consumer shopping habits, with a preference for online shopping over traditional retail. Companies are seeking facilities that can support efficient logistics and supply chain operations to meet customer expectations for fast delivery times.
Technological Advancements:
Industrial spaces are becoming more advanced technologically, with automation, robotics and smart warehousing solutions being integrated into the infrastructure. Minnesota’s industrial sector is adapting to these changes to enhance efficiency and reduce operational costs. Older industrial facilities in Minnesota are being repurposed for modern uses, including light manufacturing, data centers and mixed-use developments.
Rising Rental Rates:
With the increased demand for industrial spaces, rental rates have been trending upwards. Minnesota remains competitive compared to other major markets, offering opportunities for investment and development.
Summary/Outlook:
Landlords are confident and optimistic, especially those anticipating longer hold periods. Tenants anticipating a shift from a landlord’s market to a tenant’s market will be disappointed. The Minneapolis industrial market continues to show strength through Q1 & Q2 of 2024. There has been 1.2MSF of positive net absorption, compared to 1.5MSF during the same period in 2023. The market remains favorable to landlords with vacancy at 6.8%. New construction has slowed to 1.4MSF (under construction) with only 25% being speculative builds. Sales and leasing activity remain robust; and we expect an uptick in sale activity through the second half of 2024, driven by an expected decrease in federal interest rates in Q3.
The Newmark Industrial Team is well-equipped to assist with your industrial commercial real estate needs. Our Minneapolis team focuses on the purchase, sale and leasing of industrial, office, land and investment properties located throughout the full Twin Cities metro. With over 60 years of combined team experience, our team has extensive experience representing tenants and landlords backed by in-depth market knowledge.
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For more information, please contact:
Dan Friedner, Senior Managing Director | 612-430-9991 | dan.friedner@nmrk.com
Jay Chmieleski, Senior Managing Director | 612-430-9982 | jay.chmieleski@nmrk.com
Patrick Cullen, Associate Director | 612-430-9995 | patrick.cullen@nmrk.com
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