Puppies Don't Need 32' Clear - How Pet-Centric Users Absorb Industrial Leasing in the Twin Cities

It’s truly a dog’s life in the Twin Cities metro leasing market as of late we are seeing more and more pet-centric users moving into industrial flex/office space in suburban markets. The overall industrial vacancy rate is at an all-time low, leveling out at just under 6.43% and pet companies are an emerging contributor to this rate. These pet users range from hotels/daycares, food production/distribution to hospital or rescue facilities. Recent examples can be seen throughout the suburban metro markets and include: Mission Animal Hospital who moved into 12,000-square-feet at the office showroom building Southwest Crossing in Eden Prairie;  SoJo’s, a raw pet food manufacturing company, who leased 100,000 square feet of office/manufacturing space in a flex industrial space at Bridge Point in South St. Paul; and Second Hand Hounds, a nonprofit organization that works to provide shelter, vet care and forever homes for at-risk dogs and cats, took 14,174 square feet in the flex/office industrial park, Baker Tech in Minnetonka. These users are finding that industrial spaces lend themselves perfectly to their unique needs, namely because these spaces often have central and visible locations, high finish with easily adaptable floorplates that allow for optimal and efficient tenant improvement packages, ample “front door” parking and more often than not, offer a cheaper square-foot rental rate than the office or retail product competition. This lower rate is due in part to the ceiling height. Puppies generally don’t need 32” clear heights, but many industrial users do. Owners of older, well-located buildings with lower clear heights will often reduce rents to attract a nontraditional user, which makes this kind of product type perfect for pet companies. The growth of the pet industry shows no sign of slowing down. In fact, consumer spending on pet-related products and services has increased year over year, even during the recession, and is expected to cap out at nearly $73 million in 2018. Working with a tenant broker who understands, not only the economics of this growing industry, but works and listens to the companies’ unique needs around their occupancy, can help a growing or start-up pet-centric user find the best location, at the lowest rate, with the highest TI, while securing a happy landlord and tenant marriage within the industrial or mixed-use product type in the Twin Cities market.



Tom Hoffman

Senior Vice President

Colliers International | Minneapolis - St. Paul 

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September 6, 2019

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