By Beck Erholtz, Commercial Agent | Goldmark Commercial Real Estate
One of the questions I get asked most often by investors is simple: “Where should we actually be looking right now in the Fargo Metro?”
The answer changes depending on asset class, interest rates, tenant demand, and new supply hitting the market, but the first quarter of 2026 gave us some very clear direction. The biggest takeaway is that industrial rebounded much faster than most people expected, retail remains steady in the right locations, and office still has some underlying concerns despite modest improvement. The opportunities are there, but they are becoming much more submarket and product-specific than they were even two or three years ago.
Industrial was unquestionably the story of Q1. The FM metro leased more than 432,000 square feet of industrial space in Q1 alone, which actually surpassed all of 2025’s total industrial leasing volume of roughly 294,000 square feet. That type of rebound caught a lot of people off guard, especially considering how difficult industrial leasing felt for much of last year. We also saw two industrial leases over 100,000 square feet and another above 50,000 square feet, which tells me larger users are actively making decisions again instead of sitting on the sidelines.
Metro industrial vacancy fell from 4.7% at the end of 2025 to 3.4% by the end of Q1 2026, while West Fargo remained extremely tight at just 1.6% vacancy. Most of the activity continues to center around functional warehouse and manufacturing space with interstate access, outdoor storage capabilities, and newer construction. Users right now care much more about efficiency, clear heights, truck flow, and expansion potential than flashy finishes.
West Fargo continues to separate itself as one of the strongest long-term growth areas in the metro. Industrial sales volume in West Fargo jumped more than 200% year-over-year in Q1, highlighted by the $19.7 million sale of the 202,000 square foot industrial facility at 200 9th Street North to local REIT. On top of that, new industrial permit values across the metro rose nearly 379% year-over-year, including a new $5.5 million manufacturing facility in West Fargo. That tells me companies are not only leasing space, but they are still willing to invest capital into long-term operations here.
Retail has been much steadier than many expected, considering broader economic uncertainty. Metro retail vacancy remained low at 4.4%, and leasing activity rebounded nicely after a difficult Q4. However, the retail market has become extremely dependent on location and tenant mix. Properties near strong traffic corridors, dense residential growth, and established co-tenancy are still performing well, while weaker retail corridors are seeing landlords adjust pricing to maintain activity.
One of the more interesting stories in retail right now is Downtown Fargo. Downtown retail vacancy climbed to 18.7% in Q1, while asking rents in parts of downtown are down more than 11% year-over-year. For some investors, that creates hesitation. For others, especially those with a longer-term outlook, it creates opportunities to buy quality real estate at pricing that was difficult to find a few years ago. I think downtown still works for the right ownership group, but expectations around lease-up timelines and rent growth need to be realistic.
Office continues to be the most challenging sector overall, even though Q1 showed modest improvement. Metro office vacancy improved from 11.1% to 10.1%, and available inventory dropped about 8% quarter-over-quarter. That sounds encouraging on paper, but a large portion of that inventory reduction came from listings being withdrawn or expiring rather than true absorption. At the same time, trailing twelve-month office leasing volume has fallen significantly from the 330,000+ square foot range seen two years ago down to roughly 190,000 square feet today.
One thing that stood out to me in the office numbers was the continued lack of Class A leasing activity. According to the report, Class A office recorded zero leasing activity in Q1 for the second time in the last three quarters. That does not mean Class A office is dead, but it does reinforce that tenants are being far more selective about footprint, pricing, and quality of space. The larger users that are still active tend to be looking very carefully at efficiency and long-term occupancy costs before making commitments.
Another area investors should pay attention to is construction and permit activity. Industrial permit values across the metro exceeded $34 million in Q1, while retail permits jumped 2,500% year-over-year. Meanwhile, office permit values fell more than 65% year-over-year. That tells a pretty clear story about where developers and users believe future demand is heading.
From my perspective, the Fargo-Moorhead market still has real investor opportunity in 2026, but buyers need to be selective. Industrial remains the strongest overall sector, particularly in Fargo and West Fargo, while retail opportunities are becoming increasingly dependent on location and tenant quality. Downtown Fargo may create opportunities for investors willing to take a longer-term approach, and office requires much more caution and underwriting discipline than it did a few years ago.
The investors having the most success right now are not chasing headlines or simply buying based on cap rates. They are paying attention to vacancy trends, tenant demand, lease durability, and replacement costs within each individual submarket. In this environment, the best deals are usually where strong long-term fundamentals meet realistic pricing expectations. That is where I continue to see the most confidence from both buyers and lenders.