Matterhorn seeds Minneapolis small-bay push with two-building buy

Matterhorn Venture Partners has closed its first Minneapolis deal, a two-building, 57,665-square-foot small-bay industrial portfolio bought from two separate sellers and intended to seed the firm's market-level aggregation strategy, according to IREI. The Crystal building at 5221 Lakeland Avenue N holds 27,012 square feet across four suites; the Edina asset at 7385–7399 Bush Lake Road, 30,653 square feet across six, is fully leased. Both are masonry buildings with 16-foot clear heights and dedicated dock and drive-in loading.

Chicago-based 609 Real Estate sourced the buildings off-market, and Matterhorn plans to lease the remaining Crystal space, roll in-place rents to market on long-term triple-net leases, and run a capital program that spans exterior cleanup, white-boxed interior suites, new bathrooms and fixtures, and LED retrofits. IREI puts vacancy across metro sub-50,000-square-foot industrial buildings at under 2 percent, with effectively no new deliveries under way. “Minneapolis is one of the tightest small-bay markets in the country, and this portfolio gives us a functional, infill foothold at a basis well below replacement cost,” said Scott McKibben, Matterhorn's CEO and co-founder.

The Minneapolis purchase follows a larger aggregation trade by the same sponsor. In late August, Matterhorn and TPG AG announced a 16-building, $628 million shallow-bay test in Chicago. That was scale bought in one move; the two Minneapolis buildings are the seed version of the same play, an entry designed to prove sourcing before capital is scaled up.

The vacancy picture makes the rent roll the easy part of the underwriting. With vacancy under 2 percent and no construction pipeline, rolling in-place rents to market on long-term triple-net leases should carry the return; the harder test is whether Matterhorn can keep finding off-market sellers willing to transact at a basis below replacement cost until a real position exists. Two buildings do not make a market position, but the next Minneapolis acquisition will show whether the seed took.