Industrial Stalls in 2nd Quarter | Corporate Relocation Stats | Lee & Associates Office
The amount of absorption in the 2nd Quarter slowed to 200,000 square feet versus over 800,000 square feet in the 1st quarter and an average of 600,000 square feet over the previous four quarters. There has been good activity, however, many of the new signed leases will not occupy until later in the year meaning the absorption numbers will not show up until the 3rd or 4th Quarter.
Build-to-suit activity has made a deep impact on the existing inventory. Blu Dot (BTS in Otsego), Room and Board (BTS in Otsego), Ruan (BTS in Otsego), and Wagner (BTS in Otsego) are a few companies that have left significant amounts of space in their previous location. Rogers is now at over 1.6M SF of vacancy.
New construction pricing for Class A warehouse space remains right around $5.00 (quoted) per square foot. Second generation warehouse pricing is anywhere from $3.50 per square foot up to $4.75 per square foot. Even though there has been positive momentum for a prolonged period of time, rental rates have yet to increase.
The one item that continues to decrease is free rent. Landlords are offering little to no free rent on new and renewal leasing.
Numbers should rebound in the 3rd quarter and overall absorption for the year will likely be in the 2-3 million square foot range. Rental rates will start to rise in certain segments of the market but remain mostly flat.
Corporate Relocation Statistics
Brooklyn Park has been the most active city for new leasing in the Twin Cities. In the last 24 months, the city has landed corporations such as Nilfisk Advance, Wurth Adams, Olympus, and Design Ready Controls. Scannell has plans to add another 1,000,000 square feet of industrial property in the next 10 years. The area will only get stronger with more corporations.
Below is a look at the larger transactions in the Brooklyn Park/Maple Grove area:
Some statistics from the above table:
75% of users came from Northwest
0% of users came from Southwest and Southeast
17% of users came from Minneapolis
8% of users came from Northeast
Brooklyn Park accounted for 11 of the 12 deals
42% of the transactions were build to suit
75% of the Users will use the facility as a Corporate Headquarters
Lee and Associates Twin Cities Office
In the Spring of 2015, I joined the SIOR organization (www.sior.com) and attended my first conference in Arizona. The one thing that stood out to me was the number of Lee & Associates Brokers that participated in the conference. Lee was 3rd behind Colliers and Cushman. As luck would have it, I bumped into a Lee Broker out of the New Jersey office who mentioned they were looking to open a Minnesota office.
The opportunity to grow the business through the national Lee platform was very attractive. They offered capital, local ownership, and in bound business. The company is very entrepreneurial with many of the Brokers owning real estate and other Lee offices. It felt like a great fit. The Twin Cities is now the 55th office in Lee & Associates and we plan to grow it to a top 5 office in Minnesota.