Strong Year for Industrial Makes Way for Continued Market Strength in 2018
2017 ended strong for the Minneapolis-St. Paul industrial market. The fourth quarter saw 1.1 million square feet of positive absorption, which was by far the strongest quarter of the year. The 2017 total absorption figures came to 2.36 million square feet of positive absorption. This puts the year slightly off the positive pace of 2016 and 2015 but still well above annual averages of the past 15 years.
Vacancy rates continued to remain at all-time lows as demand for industrial space outpaced new supply added. The metro-wide vacancy rate of 6.6% is below last quarter’s mark of 6.8% and has improved from the 2016 year end total of 7.0% vacant.
The Southwest and Northeast submarkets stood out as the best performers of quarter four. The Northeast has continued to benefit from some of the most centrally-located new industrial developments in the entire metro area. Those developments including Northern Stacks have helped the Northeast with the most absorption in both quarter four and year-to-date of any of our submarkets. Within the Southwest, most of the strong absorption numbers came from the Shakopee industrial trade area. Shakopee accounted for 375,000 square feet of positive absorption with new construction completions. Year-to-date, Shakopee-led Southwest, ended up as the second highest total absorption of all five submarkets.