CRE W Minnesota

Chris Hickok: Industrial market coming back in Twin Cities?

Minnesota Real Estate Journal recently spoke to Chris Hickok, executive vice president and industrial market lead for the Minneapolis/St. Paul region with Jones Lang LaSalle, about the health of the industrial market in Minneapolis. The good news? Hickok said that life is slowly returning to this important market.

Minnesota Real Estate Journal recently spoke to Chris Hickok, executive vice president and industrial market lead for the Minneapolis/St. Paul region with Jones Lang LaSalle, about the health of the industrial market in Minneapolis. The good news? Hickok said that life is slowly returning to this important market.

Minnesota Real Estate Journal: Let’s start with the broad question: How is the Minneapolis/St. Paul commercial market holding up today? Chris Hickok: My expertise is on the industrial end, specifically. Within that market, we are seeing increased activity in the Twin Cities. That has been tempered a little bit, though, by companies exiting the market and/or downsizing. The good news is that in the fourth quarter of 2010 is when we did see the increased activity. That’s something that we haven’t seen for a couple of years.

MREJ: Why do you think you started to see this increased activity? Hickok:  I think part of it is due to the economy in general kind of bottoming out and starting to get back on its feet. Most companies pruned their size down to a point where they could get productive again. They had to start doing some hiring and get their production cranked up again. With distribution companies, their inventories had gotten down to minimum levels. In order to get productive again, they’ve had to beef that up.

MREJ: Are there any advantages that the Minneapolis/St. Paul region has that is helping it work through the country’s economic slump? Hickok: Some of the industries that will help pull us out of the slump have strong presences here in town, healthcare, med-tech and banking. We have a strong segment of medical technology companies in town. As they ramp up, they ramp up their real estate needs.

MREJ: Why are those particular industries so strong in this area? Hickok: The Honeywells, the Control Datas, the Boston Scientifics, their roots were here. There are many start-up med-tech companies that were launched by former employees of one of those bigger companies. These types of firms have a real presence here, and they are doing well.

MREJ: Why do you think the industrial market here has shown some signs of life again? Hickok: In the last couple of years, we’ve seen a lot of renewals. Companies were unsure of the future, so they were renewing on shorter-term deals, one-, two- or three-year terms. Because more companies today are seeing a better future, they are starting to complete longer renewals. A handful of those longer renewals took place in the fourth quarter. We saw some five- to 10-year deals. Those deals ranged anywhere from 50,000 to 240,000 square feet.

MREJ: What needs to continue to happen to see the industrial market here become even healthier? Hickok: We are fortunate here, we never did get overbuilt with spec products. We did have a few spec buildings that took a hit. But not having too many certainly helped the industrial market. What we need to see the market improve even more is for the economy to keep shooting in the right direction. We need to get job growth. Job growth really is the key.