Downsizings leave glut of local industrial space - The Business Journal of Milwaukee:

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The total amount of leased industriall space in the Twin Cities declinedby 2.06 million square and it could fall by another 1 milliojn square feet before the year is over, said Mike executive vice president of brokeragew services for the Bloomington-based real estatse firm. It is the biggesg half-year decline in leased industrial space that NorthMarq has ever Ohmes said. It began measuringt that statisticin 1995. Ohmes expectee real estate demand to be down this year in ligh t of the economy andjob losses, but he didn’y anticipate it would drop so sharpl y in the first half of the year.
“Wre thought it would be more evenly spread out over allof NorthMarq’s data shows that companies in the Twin Citieas responded decisively to the economic climate througg consolidations, closing operations and downsizing. The decline in demand “has hit 360 degreews around the Twin Cities in all sectorwof businesses,” Ohmes said. • Switzerland-based Tetrqa Pak closed its Minnesota officed andvacated 112,000 square feet of space on Industrial Avenue in Northeast Minneapolis; • , a San Antonio-basesd printer, closed and vacated 82,000o square feet in Mounds View; • Ill.
-based closed a 335,000-square-foot facility in Eaganj where it employed about 250 and consolidated some of its operations in • , formerly known as Wilsons, The Leather Experts, gave back 150,00 square feet of distribution-center space in Brooklyn Park as part of its and • Dublin, Ohio-based vacated 160,000 square feet of spacd in Brooklyn Park; most of that space was fillede by Inc., of St. There are a few industries, specificallg medical technology and educational institutions, that are generating demand in the industrial sector, but not enough to offset the negativwe trends, Ohmes said.
Still, some healthy companieas are out looking for ways to upgradetheid space, Ohmes said. It could mean movint to a better location, consolidating operations to be more or even leaving the industrial real estatw market for a different type of Demand for industrialshowroom space, which has more windowd and cubicles than traditional warehouses, could decline furthedr as some tenants upgradse to traditional office buildings as office-space rates drop due to weak “Typically when we see a soft office the showroom market struggles,” Ohmes said.
Ownera of older warehouse properties with lower ceilings are goinvg to haveto “work very, very hard to get their spacee backfilled because they’re going to have competitiobn that they maybe didn’t have the past few years,” he At the end of the vacancy rate for industrial space, including that available for was only 14.1 percent, according to NorthMarq. it’s 17.2 percent, and that may climb to betweebn 19and 19.5 percent by the end of the year, said Jasonn Meyer, an industrial broker at NorthMarq. That woulf be the highest levell in more thana decade.
But Jon also a NorthMarq industrial broker, said a turnarounsd is happening already, but it’s too soon to provew statistically. “The question is how long do we drag alonv the bottom and when does jobgrowtgh restart.” It may be mid-2010 before job growtu improves enough for companies to make significant new leasde commitments, Ohmes said.