Minneapolis-St. Paul industrial market report
Q3 2024
The Minneapolis – St. Paul industrial market has shown signs of stabilization, maintaining a vacancy rate of 5.6% for three consecutive periods from the fourth quarter of 2023 through the first half of 2024. Despite this consistency, leasing activity has continued to soften, as landlords and tenants proceed cautiously in the current economic environment. Among tenants actively leasing space, demand for spaces 150,000 square feet (sf) or larger has dwindled YTD in 2024 as leases under 150,000 sf accounted for approximately 86% of all industrial leases, a 22% greater share of leasing compared to 2023.
5.5 msf
Leasing activity
Leasing activity through the first three quarters of 2024 continues to trail previous years’ totals. YTD leasing activity is roughly 55% lower than what it is at the same time last in 2023. Leasing activity continues to soften, as a total of 2.2 msf has been leased during Q3 2024. Year-to-date a total of 5.5 msf leased, lagging substantially from 2023’s first three-quarter leasing volume of 10.0 msf. Leasing activity through the first three quarters of the year from 2018-2023 has averaged 8.9 msf, 3.5 msf more than YTD 2024.
1 msf
Under construction inventory declines
Amount of industrial space currently under construction. A variety of factors has led to a significant contraction of the construction pipeline, which is now 80.6% lower than in Q3 2023. Along with the dwindling supply of incoming new industrial space, the majority of new construction represents pre-leased or BTS projects, resulting in less available space coming on the market. With minimal new availabilities anticipated in the near future, vacancy rates should decline as currently available options are filled.
0.2%
Net absorption
Net absorption remained positive with 484,672 sf, or 0.2% of inventory, reported at the end of Q3 2024.
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