Minneapolis shares the national spotlight on industrial assets with more than 5.4 M square feet under construction – and significantly more on the horizon.
550,000 square feet net absorption occurred this quarter, bringing the year-to-date figure to 2.1 M square feet. The resulting vacancy rate is a never-before-seen 3.9%. The pace of absorption has decelerated slightly over the course of the year primarily due to the lack of options.
The market has not yet realized the gains coming from new construction because there have been relatively few deliveries thus far this year. The completions will occur throughout 4th quarter and the balance of next year.
Developers with a shovel in the ground are having a heyday. For example, Scannell Properties has a significant amount of space under construction, 1.2 M square feet, or 22.2% of the entire construction pipeline. Most of the product under construction is pre-leased as of this writing and, with few exceptions, all are expected to be full on delivery. Other active developers are reporting the same thing. The market will experience significant positive absorption in the 4th quarter and throughout next year, further tightening an already tight market in terms.