Vacancy across the Minneapolis–St. Paul market measured 4.4% in Q3 2025, reflecting strong demand and tight conditions. Despite recent fluctuations, vacancy has declined 5.1% since last year, demonstrating the market’s resilience and healthy fundamentals amid shifting tenant dynamics.
Asking rent growth slowed in Q3 2025, up just 2% year-over-year after rapid growth in prior years. Long-term rent trends remain strong despite the slowdown. Average asking rates have grown 24% in the past two years and 58% since 2020, reflecting both constrained supply and persistent tenant demand.
Speculative development gained momentum. Of the speculative space currently underway, 20% has been preleased. 70% of speculative deliveries over the past three years have been leased and occupied as of Q3 2025.
MARKET TRENDS
YOY
4.4%
Forecast
YOY
121K
SF
Forecast
Under
Construction
YOY
3.4M
SF
Forecast
Overall Bleneded Asking
Lease Rates (NNN)
YOY
$9.33
/ SF
Forecast
Read on for an overview of the industrial market.
SF
Net Absorption
Overall Vacancy
Industrial Market Report
Q3 2025 Interactive
Minneapolis - St. Paul
Download the full report
Colliers (NASDAQ, TSX: CIGI) is a global diversified professional services and investment management company. Operating through three industry-leading platforms – Real Estate Services, Engineering, and Investment Management – we have a proven business model, an enterprising culture, and a unique partnership philosophy that drives growth and value creation. For 30 years, Colliers has consistently delivered approximately 20% compound annual returns for shareholders, fueled by visionary leadership, significant inside ownership and substantial recurring earnings. With nearly $5.0 billion in annual revenues, a team of 23,000 professionals, and more than $100 billion in assets under management, Colliers remains committed to accelerating the success of our clients, investors, and people worldwide.
This document/email has been prepared by Colliers for advertising and general information only. Colliers makes no guarantees, representations, or warranties of any kind, expressed or implied, regarding the information, including but not limited to, warranties of content, accuracy, and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers excludes unequivocally all inferred or implied terms, conditions, and warranties arising out of this document and excludes all liability for loss and damages arising therefrom. This publication is the copyrighted property of Colliers and/or its licensor(s). © 2025. All rights reserved. This communication is not intended to cause or induce breach of an existing listing agreement. Colliers International MN LLC.
Colliers’ statistical tracked set for Minneapolis-St. Paul includes all single and multi-tenant industrial properties above 10,000 square feet. Heavy manufacturing and data center facilities are excluded from the total tracked inventory. Classifications are based on building clear heights, where Office Services (OS) is below 18 ft., Manufacturing is greater than or equal to 18 ft. and less than 24 ft., and Warehouse-Distribution (WD) is 24 ft. and greater. Market statistics are subject to historical revisions.
Jeremy Jacobs
Executive Managing Director
+1 952 897 7778
Jesse Tollison
Research Analyst
+1 952 225 4201
For information and inquiries, please contact us:
Back to the top
Download the full report
Colliers (NASDAQ, TSX: CIGI) is a global diversified professional services and investment management company. Operating through three industry-leading platforms – Real Estate Services, Engineering, and Investment Management – we have a proven business model, an enterprising culture, and a unique partnership philosophy that drives growth and value creation. For 30 years, Colliers has consistently delivered approximately 20% compound annual returns for shareholders, fueled by visionary leadership, significant inside ownership and substantial recurring earnings. With nearly $5.0 billion in annual revenues, a team of 23,000 professionals, and more than $100 billion in assets under management, Colliers remains committed to accelerating the success of our clients, investors, and people worldwide.
This document/email has been prepared by Colliers for advertising and general information only. Colliers makes no guarantees, representations, or warranties of any kind, expressed or implied, regarding the information, including but not limited to, warranties of content, accuracy, and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers excludes unequivocally all inferred or implied terms, conditions, and warranties arising out of this document and excludes all liability for loss and damages arising therefrom. This publication is the copyrighted property of Colliers and/or its licensor(s). © 2025. All rights reserved. This communication is not intended to cause or induce breach of an existing listing agreement. Colliers International MN LLC.
Colliers’ statistical tracked set for Minneapolis-St. Paul includes all single and multi-tenant industrial properties above 10,000 square feet. Heavy manufacturing and data center facilities are excluded from the total tracked inventory. Classifications are based on building clear heights, where Office Services (OS) is below 18 ft., Manufacturing is greater than or equal to 18 ft. and less than 24 ft., and Warehouse-Distribution (WD) is 24 ft. and greater. Market statistics are subject to historical revisions.
Jeremy Jacobs
Executive Managing Director
+1 952 897 7778
Jesse Tollison
Research Analysis
+1 952 225 4201
For information and inquiries, please contact us:
Back to the top
Download the full report
Overall Vacancy
YOY
4.4%
Forecast
Net Absorption
YOY
121K
SF
Forecast
Under
Construction
YOY
3.4M
SF
Forecast
YOY
Overall Blended Asking
Lease Rates (FSG)
$9.33
/ SF
Forecast
Download the full report
Read on for an overview of the industrial market.
Interactive Industrial
Q3 2025
Minneapolis - St. Paul
Lease Rates
938,000 sq. ft. of new supply was delivered in Q3 2025. All this space was either built-to-suit and occupied on delivery or preleased. In the summer of 2025, developers broke ground on numerous speculative sites, breaking last year’s trend of build-to-suit development dominating the construction pipeline. Of the current 3.4 million sq. ft. under construction, 2 million sq. ft. were speculative projects, and a fifth (20%) of that space has already been leased. 70% of speculative construction delivered in the past 3 years has been leased and occupied as of Q3 2025. The Federal Reserve’s interest rate cuts combined with limited supply and strong new construction leasing activity justified new speculative projects, which will bring much needed supply to market in the coming year.
Development
Capital Markets
Industrial sales volume totaled $222 million in Q3 2025, bringing year-to-date sales volume to $709 million. This is a 37.9% drop in Q3 year-to-date sales volume compared to last year. The capital markets continued to experience lessened activity due to interest rate challenges. Investors are hungry for product in Minneapolis-St. Paul due to the market’s low vacancy, conservative development pipeline, and recent rate growth. Investment deals saw much competition amongst buyers. Buyers in Q3 included institutional and private investors as well as a few developers and owner-users. The largest transaction was a net lease property that sold for $53.8 million in the Midway submarket. Industrial cap rates vary widely. New construction portfolios have demanded the lowest cap rates, as low as mid-5%. Most true warehouse deals are being done in the 6% to 7% range, and high office finish properties are trading for an 8% to 9% cap rate.
The Minneapolis-St. Paul industrial market experienced moderate absorption this quarter of 121,000 sq. ft., bringing year-to-date net absorption to 1.5 million sq. ft. Among the largest occupiers were Daedex at The Cubes at French Lake, who leased and occupied 503,900 sq. ft., Niagara Water who occupied their 424,300 sq. ft. build-to-suite in Elko New Market, and Circle K who occupied 266,300 sq. ft. in Otsego. Tenants were focused on properties in the outer metro, and suburban submarkets experienced the most positive absorption. The Northwest submarket led absorption with 608,000 sq. ft. of positive net absorption, followed by the Southwest (280,000 sq. ft.) and East (216,500 sq. ft.) submarkets. Negative absorption was most prominent in the South Central submarket, where over 1.2 million sq. ft. of space became newly vacant. Tenants like Sportsman Guide, Hunt Electric, and Advance Auto Parts each left over 100,000 sq. ft. The Midway submarket also experienced significant negative absorption of 110,000 sq. ft., bringing vacancy up from 4.3% last quarter to 4.7%.
Overall market vacancy was 4.4% in Q3 2025, which was down 5.1% in the past year. Sustained market demand of the past years held vacancy below 5%, which created a tight industrial market with sound fundamentals. Manufacturing buildings are still the most highly occupied, with vacancy sub-3%. Office services (OS) product has experienced a significant uptick in vacancy above the overall market vacancy. OS vacancy was 5.1% compared to 4.4% overall at the end of Q3 2025. Negative absorption in the Midway submarket brought core vacancy up to 4.2% while large suburban occupiers caused outer metro vacancy to fall to 6.1%. In the past two years, the Minneapolis-St. Paul industrial market experienced a large gap between vacancy in the urban core’s legacy industrial product and the new construction warehouses in the suburbs. This gap has narrowed in 2025 as the construction pipeline constricted, and some tenants relocated from the urban core to new construction buildings.
Vacancy and Absorption
Market Graph
Market Report
Key Takeaway
Historic Comparison
Market Graph
The Minneapolis-St. Paul industrial market experienced moderate absorption this quarter of 121,000 sq. ft., bringing year-to-date net absorption to 1.5 million sq. ft. Among the largest occupiers were Daedex at The Cubes at French Lake, who leased and occupied 503,900 sq. ft., Niagara Water who occupied their 424,300 sq. ft. build-to-suite in Elko New Market, and Circle K who occupied 266,300 sq. ft. in Otsego. Tenants were focused on properties in the outer metro, and suburban submarkets experienced the most positive absorption. The Northwest submarket led absorption with 608,000 sq. ft. of positive net absorption, followed by the Southwest (280,000 sq. ft.) and East (216,500 sq. ft.) submarkets. Negative absorption was most prominent in the South Central submarket, where over 1.2 million sq. ft. of space became newly vacant. Tenants like Sportsman Guide, Hunt Electric, and Advance Auto Parts each left over 100,000 sq. ft. The Midway submarket also experienced significant negative absorption of 110,000 sq. ft., bringing vacancy up from 4.3% last quarter to 4.7%.
Overall market vacancy was 4.4% in Q3 2025, which was down 5.1% in the past year. Sustained market demand of the past years held vacancy below 5%, which created a tight industrial market with sound fundamentals. Manufacturing buildings are still the most highly occupied, with vacancy sub-3%. Office services (OS) product has experienced a significant uptick in vacancy above the overall market vacancy. OS vacancy was 5.1% compared to 4.4% overall at the end of Q3 2025. Negative absorption in the Midway submarket brought core vacancy up to 4.2% while large suburban occupiers caused outer metro vacancy to fall to 6.1%. In the past two years, the Minneapolis-St. Paul industrial market experienced a large gap between vacancy in the urban core’s legacy industrial product and the new construction warehouses in the suburbs. This gap has narrowed in 2025 as the construction pipeline constricted, and some tenants relocated from the urban core to new construction buildings.
Vacancy and Absorption
938,000 sq. ft. of new supply was delivered in Q3 2025. All this space was either built-to-suit and occupied on delivery or preleased. In the summer of 2025, developers broke ground on numerous speculative sites, breaking last year’s trend of build-to-suit development dominating the construction pipeline. Of the current 3.4 million sq. ft. under construction, 2 million sq. ft. were speculative projects, and a fifth (20%) of that space has already been leased. 70% of speculative construction delivered in the past 3 years has been leased and occupied as of Q3 2025. The Federal Reserve’s interest rate cuts combined with limited supply and strong new construction leasing activity justified new speculative projects, which will bring much needed supply to market in the coming year.
Rental Rates
Subleasing / Development
Industrial sales volume totaled $222 million in Q3 2025, bringing year-to-date sales volume to $709 million. This is a 37.9% drop in Q3 year-to-date sales volume compared to last year. The capital markets continued to experience lessened activity due to interest rate challenges. Investors are hungry for product in Minneapolis-St. Paul due to the market’s low vacancy, conservative development pipeline, and recent rate growth. Investment deals saw much competition amongst buyers. Buyers in Q3 included institutional and private investors as well as a few developers and owner-users. The largest transaction was a net lease property that sold for $53.8 million in the Midway submarket. Industrial cap rates vary widely. New construction portfolios have demanded the lowest cap rates, as low as mid-5%. Most true warehouse deals are being done in the 6% to 7% range, and high office finish properties are trading for an 8% to 9% cap rate.
Vacancy and Absorption
jesse.tollison@colliers.com
jeremy.jacobs@colliers.com
jesse.tollison@colliers.com
jeremy.jacobs@colliers.com
Key Takeaways
Submarkets
Vacancy
Absorption
Vacancy and Absorption
Vacancy
Absorption
Core vs. Outer Vacancy (Warehouse-Distribution)
Asking rate growth tapered in Q3 2025, down to 2% growth year-over-year. Owners’ ability to push rates depended on limited supply and new construction costing a premium. With more second-generation space coming to market, the average asking rate has settled between $9 and $10 PSF NNN, with this quarter’s average posting $9.33 PSF. Much of the space on the market, especially new construction, was listed with a negotiable rate, which signals a continued appetite from owners to increase rent wherever possible. With interest rates constraining the construction pipeline, pockets of the market may experience exceptional rate growth in the coming year while other areas are likely to run up against tenants who are unable to pay new market prices.
Asking rate growth tapered in Q3 2025, down to 2% growth year-over-year. Owners’ ability to push rates depended on limited supply and new construction costing a premium. With more second-generation space coming to market, the average asking rate has settled between $9 and $10 PSF NNN, with this quarter’s average posting $9.33 PSF. Much of the space on the market, especially new construction, was listed with a negotiable rate, which signals a continued appetite from owners to increase rent wherever possible. With interest rates constraining the construction pipeline, pockets of the market may experience exceptional rate growth in the coming year while other areas are likely to run up against tenants who are unable to pay new market prices.
58%
24%
2%
Rate growth since 2020
Rate growth in the past 2 years
Rate growth year-over-year