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Minnesota HEARTLAND -- --- -- ------ ----- — — SNAPSHOTS - ---- -- 0 INDUSTRIAL MinneapolisMenomonee, and the General which we have seen positive Motors distribution facility was absorption is business related to { recently announced in Hudson. residential and consumer goods," "We are not expecting any major Swartz says. For example, HOM Furniture purchased the 332,000- s� � ��The one industry square-foot former Lund Industries 47* k building in Anoka,Minnesota. „ segment in which we Recent major leases in the Twin Cities area include Xpdexs'lease of have seen positive p 125,000 square feet in the LDI absorption is businessbuilding in Brooklyn Park; RR related to residential Donnelly's lease of a 110,000- and consumer goods.” square-foot build-to-suit in the Dan Swartz Crosstown North Business Center Vice President CB Richard Ellis in Brooklyn Park; Banta's lease of new developments in the near term 122,000 square feet in the 12th due to the vast amount of available Avenue Business Center in With today's market condi- existing space," Swartz says. There Shakopee; North American Mar- tions, new industrial are a few new developments in keting Group's lease of 67,000 development is sparse in Minnesota that are at the planning square feet in Park 2000 in the Twin Cities area. Only a hand- stage, including Lexington Com- Shakopee; and Land 0' Lakes' ful of local developers are attempt- mons,being developed by CSM in lease of 80,000 square feet in Pilot ing to lease speculative new con- Blaine; France Avenue Business Knob Distribution Center in Men- ai The majority of industri- Center III,being developed by Real dota Heights. 141, al development is taking place in Estate Recycling in Brooklyn Cen- Warehouse rental rates in the the outer-ring suburbs due to the ter; and Schmidt Lake Business Minneapolis area vary from $3 per scarcity of land in close proximity Center, being developed by First square foot to $5 per square foot to the metropolitan area. Industrial in Plymouth. "In order and $7 per square foot to $10 per The majority of new construction for construction on any of these square foot for office space. The projects are build-to-suit, single- projects to commence, the market overall vacancy rate in the industri- tenant buildings. Many are devel- needs to change for the better or a al market is 9.22 percent with a base oped for tenants new to the market pre-lease needs to be executed," of 314 million square feet. The east or for those wanting a second loca Swartz says. submarket has the lowest vacancy tion.As a result, the new construe—Minneapolis/St. Paul is an area rate of 5.82 percent, and the south- tion may create some additional with a diverse range of businesses. west submarket has the highest vacancy in the company's former Most landlords in town are trying vacancy rate of 11.66 percent. location, but not a significant to attract businesses for their devel- Regarding future development in amount, says Dan Swartz, vice but utthey aren't so focused the area,there are a number of s - president in the Minneapolis office of CB Richard Ellis. on the type of business because markets, to watch. "Growth will __----- There has also been significant they simply need to fill vacancies," continue in the northwest market development in office/warehouse Swartz says. all they way up in the Interstate 94 This diversity insures that no sin- corridor to St. Cloud," Swartz says. condos throughout the market. These developments have been gle tenant or tenants can drive the "When Shakopee is able to fill its successful with 2,000-square-foot market, but the activity of a large significant vacancies,it will indicate units to 4,000-square-foot units sell- tenant can affect it somewhat. For that the Minneapolis market has ing between $70 per square foot example, ADC Telecommunica- turned for the better. The northeast and$80 per square foot. tions created a vacancy rate of more has been solid for a number of Two large distribution facilities than 20 percent in the Shakopee, years and now has two, possibly • are being built across the border in Minnesota,market when it vacated three, major developers proposing Wisconsin. The Ford distribution 1 million square feet of space. significant developm ts—in center is nearing completion in "The one industry segment in Blame." ❑ 18 HEARTLAND REAL ESTATE BUSINESS 2003 SNAPSHOT REVIEW