The commercial real estate market has experienced a lot of change over the last few years. Premier Commercial Properties’ Marty Fisher has insights on the 2023 outlook for commercial real estate in the Twin Cities’ north metro. Here’s what he says you can expect next year.
2023 Outlook for the Industrial Sales Market
While the deal velocity for industrial properties is starting to slow down, interest in buying used industrial properties is likely to remain high in 2023. While deals that used to take two to three days may take one to two weeks, inventory remains low in the north metro of the Twin Cities, which has caused prices to remain high.
However, the market for industrial raw land and new construction is starting to cool off. This is due to the high price of materials and rising interest rates. Interest rates are likely to increase 0.75 to 1.0 percent in 2023.
Industrial Leasing in the Twin Cities North Metro
The industrial leasing market in Anoka County and surrounding areas continues to be very strong. Marty predicts this trend will continue through 2023. The lack of inventory for industrial space and the reluctance to build new industrial properties contribute to the trend. It will continue to be a landlord’s market in industrial leasing in 2023.
2023 Outlook for Office Sales in the North Metro
Purchases of office properties in the north metro became more negotiable in 2022, and Marty believes this will continue in 2023. Recently, more properties have gone on the market, especially multi-tenant office buildings. This has made it easier for buyers to negotiate with sellers.
Office Leasing in the Twin Cities North Metro
Over the last few years, the office leasing market in the north metro has held steady, and prices have risen slightly. Marty doesn’t see this changing in 2023 as companies choose suburban locations over downtown office space.
Retail Sales Market in 2023
Sales of retail properties in the north metro remain very, very strong. However, the strength of sales depends on the location of the property and the type of tenants the property attracts. Good locations that attract national tenants will do the best in 2023. However, retail sellers will enjoy high deal velocity and strong prices in 2023.
Retail Leasing in the North Metro
Retail leasing in the north metro will continue to be all about location. For the right tenant in the right location, rents have increased 40 to 50 percent in the last 18 months, a trend Marty predicts will continue in 2023. However, less-desirable locations are sitting on the market longer and have become more negotiable. Marty believes this segment of the market will continue to slow in 2023.
2023 Outlook for Land Sales for Higher Density Development
Here’s one last thought from Marty on the 2023 outlook for commercial real estate. While raw land for industrial use is cooling off, land sales for higher density development is a different story. Land for 55+ community development continues to be strong as demographic shifts supports growth in this sector. Meanwhile, land development for high-density residential projects has slowed a bit in the north metro.
Marty and the Premier Commercial Properties team are your experts in the north metro commercial real estate market. For more information on the 2023 outlook or to buy, sell, or lease your next property, get in touch with our team today.