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MINNEAPOLIS-Twin Cities industrial brokers think the market has bottomed out, but they are predicting a robust recovery for next year.

Scott Moe, an industrial broker with United Properties, says that small and mid-size companies are continuing to hurt. For instance, Mate and Gen-X Sports have both recently been forced to sell their buildings, Moe says. Business is hurting so much–one small pallet manufacturer told Moe–that one client has cut orders for pallets from $375,000 last year to $75,000 this year.

Some manufacturers, such as IMI Cornelius and Tyco, have moved their warehousing facilities to third world countries.

But there is reason for hope: ADC Telecommunications is done dumping large volumes of real estate back onto the market.

Pollock thinks quoted net rates should remain stable at about $4.09 over the next year, the absorption trend will improve, and vacancy rates will dip to 7% from their current level of 7.4%.

Meanwhile, Nathan Arnold of CB Richard Ellis, sees vacancy rates staying about the same, and a further fall in quoted net rents to $3.91 per sf. He thinks new construction will be minimal, and vacancy rates will stay about 7.4%.

“As long as there are five to 10 options for tenants to choose from, you will see owners getting increasingly aggressive to get deals done,” Arnold says.

The brokers offered their forecasts of the industrial market at a recent conference of the Minnesota-South Dakota chapter of the Certified Commercial Investment Member organization.

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