MPLS_Industrial Snapshot_Q2_2015Economic Indicators
Q214 Q215 12 -Month
Forecast
Minneapolis/St. Paul Employment
1.852M
1.891M
Akk�
Minneapolis/St. Paul Unemployment
3.84%
3.57%
1W
U.S. Unemployment
6.1%
5.3%
1W
Market Indicators
0214
0215
12 -Month
Forecast
Overall Vacancy
11.0%
9.3%
Net Absorption
271,499
1,367,833
Under Construction
1,800,000
2,453,343
Average Asking Rent
$4.72
$4.70
A&
Net Absorption
2Q TRAILING AVERAGE
1,200,000
1,000,000
800,000
600,000
400,000
200,000
(200,000)
(400,000)
(600,000)
(800,000)
(1,000,000)
Q1IQ2IQ3IQ4 Q1IQ2IQ3IQ4 Q1IQ2IQ3IQ4 Q1IQ2IQ3IQ4 Q1IQ2IQ3IQ4 Q1IQ2
2010 2011 2012 1 2013 1 2014 1 2015
Overall Vacancy
16.0
15.0%
14.0%
13.0%
12.0%
11.0
10.0%
9.0%
8.0%
Economy
The Minnesota economy continues the positive steps of the past years
as total employment figures continue to rise. Minnesota already has
one of the highest labor participation rates in the nation at 70.8%, and
the total employment figures are only growing. Of the 11 major
industry sectors, nine have had positive job additions in the past 12
months. The Minneapolis/ St. Paul metro area has a larger
employment growth rate than any other metro area in the state.
Minnesota unemployment rate sits at 3.6%, well below the national
average of 5.3%
Market Overview
The industrial market has absorbed 500,000 square feet in the
second quarter and year-to-date has taken 1,367,000 square feet.
This is roughly the same amount absorbed as all of 2014. The overall
vacancy rate has dropped to 9.3%, the lowest level we have seen in a
decade.
Construction remains hot as we are currently tracking 2.5 million
square feet physically under construction, with another roughly 2
million ready to begin. The majority of this construction is happening
in the Northwest submarket and bulk warehouse facilities are making
up over 90% of new construction across the metro.
Most of the absorbed space in 2015 has been in traditional office
warehouse and traditional office showroom buildings. Some bulk
warehouse users have been leaving the multi -tenant universe to own
their own facility in new construction. The older traditional office
warehouse and office showroom buildings have built momentum
based off of value and options, as there are so few vacancies in
general.
Recently announced was a new 850,000 square foot Amazon
Historical Average: 12.3% Distribution center set to start construction next year in the Southwest
— — — — — — — — — — submarket. The center will eventually employ almost 1,000 people.
With several new lease deals in the Southwest and this continued new
construction, the Southwest will see a big squeeze in the labor market.
Q11Q21Q31Q4 Q11Q21Q31Q4. Q11Q21Q31Q4 Q11Q21Q31Q4 Q71Q21Q31Q4 Q11Q2
2010 2011 2072 2013 20 1 2015
Lease deals
Polaris is consolidating some local functions into an 850,000 square
foot facility in Shakopee. Nilfisk and Blu Dot both signed new deals in
the Northwest for 180,000 square feet each.
Northeast
375
35,620,641
91,989
2,883,204
545,269
$4.63
Northwest
338
29,393,269
47,358
2,403,538
113,947 2,136,845
$4.72
Southeast
196
16,357,932
10,000
1,201,212
250,809 195,498
$4.77
Southwest
288
23,489,078
32,740
3,116,265
457,808 121,000
$4.69
Modern Bulk Warehouse
40
8,305,926
-
1,560,153
64,791
Traditional Bulk Warehouse
95
16,278,791
2,000
1,126,664
(153,838)
Modern Office Showroom
89
5,058,832
16,966
413,324
112,339
Traditional Office Showroom
413
26,367,267
87,603
2,671,367
357,643
Modern Office Warehouse
144
12,295,225
57,798
875,812
171,648
Traditional Office Warehouse
363
28,929,764
87,603
2,312,089
765,448
Former Single Tenant
53
7,625,115
-
574,927
49,802
Industrial asking rents converted to NNN
Key Lease Transactions 2Q 2015
North Cross Business Park Bldg 2 182,000 Nilfisk New NW
Kmart Distribution 850,000 Polaris New SW
Key Sales Transactions YTD
PROPERTY SIF SELLER/BUYER PRICE SUBMA.7
11611 Business Park Blvd. 167,036 W.P. Carey Inc. / Egan Co. $7,000,000 NW
1775-1801 Old Highway 8 NW 89,542 Edwin and Diana Taylor / Biynah Industrial Partners $4,450,000 NE
About DTZ
DTZ is a global leader in commercial real estate services providing occupiers, tenants and investors around the world with a full spectrum
of property solutions. The company's core capabilities include agency leasing, tenant representation, corporate and global occupier
services, property management, facilities management, facility services, capital markets, investment and asset management, valuation,
research, consulting, and project and development management. DTZ provides property management for 1.9 billion square feet, or 171
million square meters, and facilities management for 1.3 billion square feet, or 124 million square meters. The company completed $63
billion in transaction volume globally in 2014 on behalf of institutional, corporate, government and private clients. Headquartered in
Chicago, DTZ has more than 28,000 employees who operate across more than 260 offices in 50 countries and represent the company's
culture of excellence, client advocacy, integrity and collaboration.
DTZ announced an agreement to merge with Cushman & Wakefield in a May 11 press release. The new company, which will operate under
the Cushman & Wakefield brand, will have revenues over $5.5 billion, over 43,000 employees and will manage more than 4 billion square
feet globally on behalf of institutional, corporate and private clients. The agreement is subject to customary closing conditions and is
expected to close before the end of 2015. For further information, visit: www.dtz.com or follow us on Twitter @DTZ.
www.dtz.com 12