Chicago developer Clayco will build a 1-million-square-foot speculative distribution center in Dayton, Minn., company officials have announced.

The new Cubes at French Lake project will be developed by Clayco's CRG arm and is expected to be completed sometime in 2022, officials said Tuesday. Terms were not disclosed.

"The Cubes at French Lake will be CRG's first super-bulk inventory distribution facility in Minnesota and the largest speculative industrial facility developed in the state," said CRG senior vice president and partner Jeff Lanaghan.

The new building will be at 11500 Lawndale Lane on 65 acres of land next to the new Dayton Parkway Interchange and close to Interstate 94 and Hwy. 610. The location is about 35 miles from the Minneapolis-St. Paul International Airport.

The project, which will be leased by Lee & Associates, is the latest speculative industrial building to rise in the Twin Cities metro area.

Last month, United Properties broke ground on five industrial facilities across the Twin Cities. The buildings planned for Brooklyn Park and Inver Grove Heights have yet to land tenants, while the others have pre-leases.

CRG, Star Tribune
CRG’s speculative distribution center in Dayton, Minn., is planned for 65 acres of land next to the new Dayton Parkway Interchange and close to Interstate 94 and Hwy. 610.

Also in May, Toronto-based WPT Industrial Real Estate Investment Trust paid $12 million to buy 40 acres in Shakopee with plans to build a large speculative warehouse.

Since 2018, CRG has broken ground on nearly 18 million square feet of "The Cubes" industrial projects across the country. More than half are completed and rented.

Warehouses, logistics centers, data centers and other industrial spaces are in high demand as online shopping and home delivery shifted into a higher gear during the pandemic. According to Colliers International, vacancy rates for industrial buildings across the Twin Cities were just 4% during the first quarter.

CRG officials see opportunity.

"Like many parts of the country, the Minneapolis-St. Paul region has a low industrial vacancy rate and growing need for Class A distribution facilities, especially of this size and quality," said Lanaghan, who oversees CRG's Midwest region. "The Cubes at French Lake will fill the need for large, well-located space with access to major population centers."

The proposed distribution center will include 40-foot-high ceilings, an "early-suppression fast response" fire system, large truck bays and extra-large dock doors.

Lee & Associates principal Chris Garcia plans to market the property and doesn't expect the search for tenants to be a problem.

"The surge in e-commerce has rapidly increased demand in the Twin Cities, and today's users are looking for next-generation facilities that give them the flexibility and scalability needed to keep pace with the market," Garcia said.

CRG is not the only firm to eye Dayton for fresh industrial development.

In February, Minneapolis-based spray and pump maker Graco bought 100 acres of land in the French Lake Industrial Center. Graco plans to build a 500,000-square-foot factory and warehouse there so it can relocate at least 225 workers from its Minneapolis-based industrial products division and its processing division.