We passed the midway point of 2016 and the industrial market continued to be a strong performer. One driving factor was the strength of the Northeast submarket. The Northeast led the Metro in absorption and held the lowest vacancy rate of any submarket by nearly two percent.
Cushman & Wakefield/NorthMarq’s Jason Sell expounds on the robust activity in the Northeast submarket, “Most of the growth has still been off the 35W corridor, stretching up to Blaine and over to Fridley. Northern Stacks in Fridley gained momentum and was one of the most active developments in the Twin Cities over the last six to nine months while filling two buildings and moving on to a third. Midway Stadium Business Center in St. Paul is under construction and has landed the first tenant while negotiating with a second tenant to take a large part of the remaining space.”
Construction activity continued, but the majority of new starts were build-to-suit projects. The Northwest submarket has experienced most of the new construction in the last two years. The combination of new vacant speculative construction completions and build-to-suit projects pulling users out of the multi-tenant universe has, once again, left the Northwest with the highest vacancy rate of any submarket.
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Jason Sell is a Senior Director with the Minneapolis/St. Paul Industrial Team.
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Cushman & Wakefield/NorthMarq releases the July 2016 edition of The Compass Report.
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According to Mike Ohmes, Executive Vice President of Transaction & Advisory Services, “The Twin Cities multi-tenant market fundamentals continued to improve throughout the first half of 2016… Every sector reported positive results, and except for a few pockets of softness, every sector should see continued improvement throughout the balance of the year.”
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According to Cushman & Wakefield, “For economists or real estate analysts who usually strive to work in the realm of numbers and hard data, answering the question, “what is cool?” almost seems frivolous. Except that it is not. In fact, for retail the stakes couldn’t be higher. Ignore cool at your own peril.”
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The Twin Cities has enjoyed more than four years of sub-3% vacancy. That is a testament to the strong demand in the market, which is all the more notable given the influx of new supply.
Cushman & Wakefield’s Robert Dulin shares his thoughts on the rising rental rates and new market developments continuing in 2016. “We believe the Minneapolis multi-family market will continue to thrive in the second half of 2016, fueled by solid rent growth and low vacancy across all property types. The development trend moving into the rest of 2016 is focused on best-in-market suburban locations, where over 60% of the current developments are located. The amount of larger deals trading hands should continue, driven by low interest rates and strong fundamentals.”
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Robert Dulin is an Associate in the Capital Markets Group.
An improving economy attracted a near-record number of business and leisure travelers to Minnesota and the Twin Cities in 2015. Significant benchmarks – occupancy, revenue per available room (RevPAR) and average daily rate (ADR) – all experienced gains in the second half and are expected to continue growing.
Cushman & Wakefield/NorthMarq’s Ronn Thomas adds his thoughts on activity continuing into 2016, “Despite readily increasing supply in the suburban and core submarkets, investor interest in Twin Cities hotel assets is very strong. Most properties are performing very well with occupancy, RevPar and ADR numbers at or near record levels. This robust performance should continue through 2016.”
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Ronn Thomas is a Senior Director in the Hospitality Group.