Q3 2023 Minneapolis Industrial Market Report

The Minneapolis-St. Paul industrial market remains fundamentally strong, despite a deceleration of demand. With over 13 million square feet of user-activity in the market, the industrial market has seen a continued rise in asking rates across the market. While speculative development starts slowed, there is still an expected delivery of nearly 1.9 million square feet by the end of the year with an additional 3 million square feet currently under construction – including built-to-suit development – to be delivered in 2024. A large portion of this development is seen in the Southeast submarket. In contrast, the majority of leases signed in the third quarter 2023 were signed in the Northwest submarket which is a continued trend we see in the market.

Even as a historic supply wave has increased the vacancy rate slightly over the past year, as of the end of the third quarter, it remains below the market’s historical average. Investment sales have slowed largely due to high interest rates and challenging debt markets.

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