Minneapolis-St. Paul Industrial Market Report

Uncertainty pressuring manufacturing, but vacancy still nationally low. In 2025, metro exports fell roughly 16 percent, compared with a 6 percent national gain, and net international migration into the metro fell 65 percent, constraining labor force growth. These trends align with weaker sentiment among local manufacturers, many of whom by late 2025 expected slower order growth and tight labor conditions to pressure margins in 2026. Manufacturers responded last year by leasing 21 percent less space than in 2024, which, combined with preliminary 2026 data, indicates demand may remain subdued this year. Warehouses and distribution centers, however, have proved more resilient. Cottage Grove-Forest Lake, for example, posted a 500-basis-point vacancy decline in 2025, driven by a nearly 45 percent increase in leasing, most of it in warehouses and distribution space. More broadly, with nearly 85 percent of the 2026 delivery slate accounted for, limited speculative supply pressure should keep the metrowide vacancy rate the tightest nationally.