The Twin Cities industrial market posted 344,000 square feet (sf) of positive direct absorption in the third quarter. Direct vacancy dropped nearly 1% from second quarter to 10.8%.
The Northwest submarket led the way with more than 248,000 sf of positive direct absorption, and direct vacancy declined to 9.4% from 10.3% in the second quarter. The Northeast saw 75,000 sf of positive direct absorption, and direct vacancy continued to decrease from 12.3% to 10.9%. In the Southeast, direct vacancy dropped from 11.7% to 10.4%, and the submarket recorded more than 45,000 sf of positive direct absorption. Once again, the Southwest recorded negative absorption with more than 25,000 sf in the third quarter, and direct vacancy increased from 12.4% to 12.6%.
The direct weighted average asking rate across all property types and submarkets remained flat at $4.33 per square foot (psf) NNN in the third quarter of 2013. Upward pressure is expected as a few speculative projects enter the market.
The Twin Cities industrial market remains tight for larger blocks of space which should lead to speculative projects. The market should see positive absorption in the fourth quarter of 2013 but not to the level projected earlier this year.