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CBRE <br />MARKETVIEW MINNEAPOLIS/ST. PAUL INDUSTRIAL <br />MARKET OVERVIEW CONT'D <br />Direct vacancy rates for Q1 2017 ended at 4.7%, <br />which is up 40 basis points (bps) quarter -over - <br />quarter. This change in vacancy reflects the trend <br />of companies downsizing space into newer, more <br />modern locations. For those that did need <br />additional space, the standard has shifted. New <br />construction is the method of choice to fulfill the <br />needs of the tenant, resulting in 1,057,173 sq. ft. <br />of completed construction in Q1 2017 being BTS. <br />Average net asking rates of the industrial market <br />have had a year -over -year increase of 1.1%, ending <br />at $5.85 per sq. ft. in Q1 2017. <br />ABSORPTION BUILDS ON ITS HOT STREAK <br />Q1 2017 absorption numbers continued the <br />streak of positive net absorption, counting 27 <br />consecutive positive quarters. While 458,276 sq. <br />ft. maintained the streak, it is a year -over -year <br />decrease due, in part, to some large tenants <br />downsizing their operations. Single tenant BTS <br />was the largest driver to push the absorption <br />positive. For those not downsizing, when it was <br />time to expand, BTS construction was the <br />preferred method of expansion. <br />Dakota Supply had the largest lease transaction, <br />occupying 135,447 sq. ft., followed by MVP <br />Logistics with 108,988 sq. ft. and V-Star <br />Entertainment Group rounding out the top three <br />with 104,818 sq. ft. <br />Figure 2: Top Lease Transactions <br />CONSTRUCTION <br />Q1 2017 was a big quarter for construction <br />completions. With ten projects wrapping up, <br />1,353,231 sq. ft. were added to the market with <br />89.9% pre -leased upon completion. Many of the <br />projects that finished were BTS, which accounted <br />for the high percentage of pre -leased space. <br />The largest construction completion in the <br />market was a 192,000 sq. ft. BTS in the bustling <br />town of Hopkins, within the Southwest <br />submarket. Japs-Olson Company was the sole <br />tenant of this project. <br />The next largest completion also happens to be <br />the largest spec project of the ten finished <br />buildings, at 189,000 sq. ft. Upon completion, the <br />Midway Stadium Business Center was 28% leased. <br />Other Spec completions include Northern Stacks <br />II and Chanhassen West Business Center III. <br />Ten projects are currently under construction in <br />the market, with half BTS and the other half spec. <br />When all is complete, another 1,368,016 sq. ft. of <br />industrial space will be added with approximately <br />40% uncommitted and available. <br />Tenant Size (Sq. Ft.) <br />Address Transaction Type <br />Dakota Supply <br />135,447 <br />845 Berkshire Ln. <br />Renewal/Expansion <br />MVP Logistics <br />108,988 <br />14600 N 21,1. Ave <br />Renewal <br />V-Star Entertainment Group <br />104,818 <br />44 E Northern Stacks Dr. New <br />Ceva Freight, LLC. <br />103,407 <br />3169 Dodd Rd. Relocation <br />Colo <br />Source: CBRE Research, Q1 2017 <br />88,000 <br />201 Armour Ave. Renewal <br />Q1 2017 CBRE Research <br />© 2017 CBRE, Inc. I 2 <br />