Vacancy rate near 7% in St. Cloud’s industrial market

Vacancy rate near 7% in St. Cloud’s industrial market

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ST. CLOUD — Nearly 2 million square feet of industrial real estate remain vacant in the greater St. Cloud area.

And, if

Fulfillment Distribution Center

isn’t able to find another vendor by October, that number could rise to nearly 3 million square feet of vacant industrial spaces, according to Parcel Real Estate CEO and Principal Broker Sam Johnson. FDC is planning to close in October after losing its lone customer.

“There’s simply not enough local users to backfill the space available in the greater St. Cloud marketplace,” Johnson said. “We need manufacturing and logistics companies to move into the region in order to backfill space.

“We have landlords here with open arms, ready to deal with companies considering making St. Cloud their home.”

The city’s vacancy rate of 6.9% is roughly 33% higher than the national average of 5.2%, according to

Commercial Edge.

electrolux.png

The former Electrolux building is located at 701 N. 33rd Ave. in St. Cloud.

Contributed / Google Maps

Source: Parcel Real Estate, CoStar submarket report.

After a record-breaking year in 2022, which saw a total of $93.8 million in deals, the industrial real estate market has since cooled, according to Kate Hanson, a senior advisor and partner at

SVN GC Real Estate.

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Kate Hanson is a senior adviser and partner at SVN GC Real Estate.

Contributed / SVN GC Real Estate

“In our industrial category, I feel like we’re healthy, but we (aren’t) as crazy as we were kind of around that second to third quarter of 2022,” Hanson said. “I think that was the peak of our market for on-market inventory. That’s where we found the most amount of multiple offers so we saw the people paying the most.”

As of mid-May, the St. Cloud industrial real estate market has seen 15 deals completed for $16.5 million.

However, the price per square foot for sales has increased by more than 64% since two years ago.

“A post-pandemic world is very different. Your property could be where the low end is $55 (per square foot), and in the high end, you’re in the ($70 per square foot). We’ve even seen some anomaly numbers above the $70,” Hanson said.

A mid-May CoStar submarket report indicated that zero industrial construction projects were underway in the St. Cloud area.

Hanson pointed to a few factors for this lull, including rising interest rates and construction costs.

“What it costs to build today is such an exorbitant number that only owner-occupants can build. You can’t build it … Where you built it and hoped they would come because the cost of construction is so high,” she said.

Hanson added the market isn’t expecting to change.

“Construction, we don’t see that going down any time soon. Even (if)materials have come down a little bit, but your labor costs aren’t coming down,” she said.

Total industrial sales year

  • 2024 (YTD): 15 deals, $16.3 million (average price $1.3 million)
  • 2023: 39 deals, $42.5 million (average price $1.3 million)
  • 2022: 53 deals, $93.8 million (average price $2.1 million)
  • 2021: 47 deals, $56.9 million (average price $1.4 million)
  • 2020: 53 deals, $64.6 million (average price $1.7 million)

Recent significant sales (past 12 months)

  • 10 Industrial Boulevard, 100,000 square feet, $6 million 
  • 5205 Foundry Circle, 91,151 square feet, $5.2 million
  • 30409 76th Avenue, 46,132 square feet, $3.325 million
  • 390 Industrial Boulevard, 29,312 square feet, $2.5 million 
  • 732 Eighth Avenue South, 33,000 square feet, $2.475 million

Rent vacancy per industrial sector

  • Specialized industrial: 1,342,445 square feet or 12%
  • Logistics: 458.178 square feet or 2.9%
  • Flex rent: 130,527 or 16.6%

Source: CoStar submarket report

Trent Abrego is a business reporter for St. Cloud LIVE and can be reached at trent@stcloudlive.com.



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