Industrial

E-Commerce Industry Solves Logistics with Air Cargo in New York City

by David Cohen August 29, 2018

As the e-commerce industry continues to grow and evolve, demand for industrial warehouse product located in dense urban areas situated with access to transit infrastructure, particularly air transit, has grown. The industrial sector has been experiencing multiple years of record rent growth, both locally in New York City and nationally, with average asking rents reaching nearly $30 per square foot in western Brooklyn and parts of Queens. This rapid rise in rents is driving property values higher and generating robust investor demand for this asset class. By way of example, the newly constructed FedEx warehouse in Maspeth, Queens recently sold for nearly $750 per square foot. Simultaneously, we are seeing the evolution and realignment of the supply chain to match a changing retail landscape. E-commerce sales have caused a 300 percent increase in the demand for logistics and distribution spaces, as opposed to traditional brick-and-mortar retail locations. The impact of e-commerce will only continue to accelerate, and the need for new industrial product will grow along with it. For every $1 billion increase in e-commerce sales, an additional 1 million square feet of distribution space will be required. And it’s not solely e-commerce companies that are starting to think about …

August 29, 2018

Industrial Market Reports New Mexico Western Western Market Reports

Albuquerque’s Industrial Market Sees Strong Absorption From Warehouse, Manufacturing Users

by Taylor Williams August 28, 2018

The metro Albuquerque industrial market reported more than 39 million square feet of total industrial space as of year-end 2017. The two largest categories of occupied space were warehouse/distribution (12.5 million square feet with 5.5 percent vacancy) and manufacturing (12.55 million square feet with 3.5 percent vacancy). The overall market vacancy rate at the end of 2017 was 5.7 percent for all industrial uses in buildings with more than 10,000 square feet. New Mexico added about 11,000 non-agricultural jobs from February 2017 through February 2018. The Albuquerque MSA added 5,800 jobs — a 1.5 percent increase — over this period, or more than half of the new jobs added in New Mexico. Albuquerque’s unemployment rate was 5 percent as of February, which is a notable improvement over the 6.2 percent unemployment rate in February 2017. During this period, the private service-providing industries grew by 3,100 jobs, or 1.2 percent, while the goods-producing industries (warehouse and manufacturing users) added 2,300 jobs, representing a gain of 6.2 percent. Albuquerque’s industrial market experienced positive net absorption of more than 261,000 square feet during the fourth quarter of 2017. This was the highest net absorption since the fourth quarter of 2015, and the second-highest …

August 28, 2018

District of Columbia Industrial Market Reports Southeast Southeast Market Reports

Land Constraints, Demand from Big Data Spur Rent Growth in D.C. Industrial Market

by John Nelson August 27, 2018

The 195 million-square-foot Washington, D.C., metropolitan industrial market features various sectors and centers of demand across the region. The overall market has been extremely healthy, with unique forces impacting the area’s primary regions of Northern Virginia, Suburban Maryland and Washington, D.C. The overall metro market expanded between first-quarter 2017 and first-quarter 2018. Net absorption in the period was 1.7 million square feet, albeit a significant slowdown from the previous 12-month cycle (4.2 million square feet). After falling significantly during the past five years, vacancy remained relatively flat in first-quarter 2018 and settled at 6.8 percent, a 10-basis-point drop year-over-year. A lack of available space limited opportunities for occupancy gains but allowed owners to increase asking rents. The average asking rent rose sharply to $10.04 per square foot, up from $9.58 per square foot one year earlier. Of the 1.9 million square feet of new supply under construction, 1.3 million square feet was in Northern Virginia’s less constrained but in-demand Loudoun County. Overall new supply was 55 percent preleased at the end of the first quarter. The Washington metro industrial market inside the Interstate 495 Beltway contrasts in many ways to the market outside the Beltway. The most significant difference is …

August 27, 2018

Industrial Market Reports Texas Texas Market Reports

Building Boom Forces Dallas Industrial Developers to Mix it Up

by Taylor Williams August 24, 2018

As industrial development ramps up across the country in an effort to keep pace with demand, developers are eyeing Dallas-Fort Worth (DFW) for new projects, forcing existing players to get more creative with their site selections and design elements. The DFW metroplex has experienced millions of square feet of industrial development over the past year. The market currently has more than 27.9 million square feet of space under construction. If DFW continues to expand at this pace, year-over-year industrial growth will outpace that of 2017. As infill sites become more scarce, developers revisit land that was once looked over for previous projects. Some of these sites include closed landfills, shuttered golf courses and tracts that may have had unusual hurdles such as drainage, utility or environmental issues. Going South Of all the submarkets that comprise the metroplex, South Dallas enjoys the largest share of development. Over 7 million square feet of product is currently under construction in this submarket, which may puzzle those familiar with the area, as it has historically been less attractive to smaller, more regional tenants. Location is partly to blame for this pattern. South Dallas can be quite a drive for local business owners. In addition, …

August 24, 2018

Industrial Market Reports Self-Storage Texas Texas Market Reports

Oversupply, Taxes Choke Self-Storage Growth

by Taylor Williams August 17, 2018

Self-storage properties have had a pretty good run in Texas over the last several years. Surging population growth has brought more material possessions into the state, boosting absorption of existing space. In addition, ample land for development has enabled builders to bring self-storage — a submarket-specific business — to new, underserved communities. The investment side of the business has flourished as well. A capital-rich environment has sustained a healthy pace of development and price escalation has kept cap rates low, incentivizing many owners to market their properties for sale. The building boom is still running hot. According to Tennessee-based research firm STR, as of June 2018, there were more than 300 self-storage facilities in the development pipeline in Texas. In the 12 months leading up to that point, 72 new facilities totaling almost 7 million square feet came on line. In addition, about 130 new properties are slated to open by June 2019, adding more than 9 million square feet, or 5.7 percent of the existing inventory. And those figures only encompass the seven biggest markets in Texas. According to The Houston Chronicle, the Dallas, Houston, Austin and San Antonio markets all feature about 8 square feet of storage space …

August 17, 2018

Industrial Market Reports Midwest Midwest Market Reports Ohio

Cleveland Industrial Market Embraces New Projects

by Kristin Harlow August 16, 2018

The industrial real estate market in Cleveland has a long and storied history. The region’s market powered much of the overall growth in the early 20th century and, at that time, propelled Cleveland to the nation’s sixth largest city. The market transitioned to automotive production, which reached its peak in the 1960 and 1970s. Nearly half a million people were employed in the automotive sector during these decades, in plants operated by Ford, Chrysler and Chevrolet, or at the thousands of third-party companies that supplied everything from wire harnesses to pumps and steel. Over the next half century, the market has again transitioned and while domestic automotive production is still a critical component, advances in technology coupled with a gradual but consistent decrease in the number of vehicles actually being built has resulted in considerably fewer people being employed in the auto industry. Current estimates are around 120,000 jobs. A terrific example of this transition is the former Chrysler stamping plant in the Cleveland suburb of Twinsburg. It opened in 1956 and quickly became a critical part of the auto giant’s production cycle, processing and stamping over 25,000 tons of steel annually. At its peak, the plant employed over 5,000, …

August 16, 2018

Industrial Market Reports North Carolina Southeast Southeast Market Reports

Industrial Developers are Building for the Long Term in Charlotte

by John Nelson August 6, 2018

As demand for e-commerce and corporate distribution space continues to drive supply chain expansion in the Southeast, many developers are designing facilities to accommodate the truck-dependent, labor-driven operations present today and for the near-term. While robotics and automated vehicles are exciting to dream about, the reality is that these innovations are not expected to impact industrial building design any time soon in the Southeast. Modern industrial buildings that can support heavier than average employee parking needs while also providing abundant trailer storage are the standard for new projects. At the same time, these buildings need to support advanced technology, automation and extensive stacking and sorting operations. By building with an eye toward long-term tenant needs, developers are working to differentiate themselves in this highly competitive environment. These trends are particularly apparent in the Charlotte market, where developers have added 4.5 million square feet of industrial space over the past year. With a 5.3 percent vacancy rate in the first quarter of 2018, the market is well positioned to absorb the additional 4.7 million square feet of projects in the pipeline. Of that total, 62 percent is either preleased or set to be owner-occupied. Modern Design Demands At the core of …

August 6, 2018

Colorado Industrial Market Reports Western Western Market Reports

Industrial Investors, Developers Turn Up the Heat in Denver

by Taylor Williams July 31, 2018

Denver industrial assets are achieving record pricing as cap rates compress well below 5 percent for Class A product. As this is happening, developers are taking on hefty projects, signaling that Denver’s industrial real estate cycle is stretching its legs instead of winding down. Among the headlines: • Denver’s single largest investment transaction on record occurred in the first quarter of 2018. The Pauls Corporation sold 14 Class A, highly functional assets totaling 1.9 million square feet to Clarion Partners in the Airport submarket. • The largest speculative build of 701,900 square feet is underway by Majestic Realty. Prologis is building more than 500,000 square feet in the Central submarket, while Hyde Development kicked off the 1.8-million-square-foot 76 Commerce Center project in the “less than proven” I-76 Corridor. • Industrial land pricing has doubled in recent years to now double-digit pricing as triple-net asking lease rates approach $8 per square foot. Despite these impressive headlines, here are three reasons we expect further expansion in Denver’s industrial sector into 2019. Investor Preferences Align CBRE’s 2018 Americas Investor Intentions Survey revealed a dramatic increase in the popularity of industrial investments compared to years prior. Half of investors in the Americas are seeking …

July 31, 2018

Industrial Market Reports Texas Texas Market Reports

Building Size Matters in Amarillo Industrial Market

by Taylor Williams July 13, 2018

Amarillo’s industrial market is truly a tale of two sectors, as some form of that expression goes, and the key number is 50,000 square feet. The occupancy rate for industrial properties in the sub-50,000-square-foot range in Amarillo remains very high, with few properties of this size sitting on the market for extended amounts of time. With such high occupancy rates, several new developments have recently sprung up. Those with both large footprints and divisible floor plans to meet the needs of smaller tenants tend to be most successful in terms of leasing velocity. In addition, developers of this product type are seeing its success and gravitating to Amarillo with spec projects. This sector of the industrial market should remain profitable for developers unless construction costs increase at a greater pace than rents can justify. The lull lies in existing properties that measure more than 50,000 square feet. In a smaller market like Amarillo, properties of this size sitting empty can be an ominous sign, and a few in particular have really come to symbolize concerns about sales of assets of this magnitude. Such properties include a 140,208-square-foot manufacturing facility previously occupied by chemicals manufacturer Techspray; a 115,000-square-foot facility formerly occupied …

July 13, 2018

California Industrial Market Reports Western Western Market Reports

The Inland Empire: A Premier Southern California Industrial Market

by Taylor Williams July 10, 2018

The Inland Empire continues to be one of the most dynamic industrial real estate markets in the country from both a user and investor perspective. Rent growth remains exceptionally strong, boasting a growth rate of more than 50 percent in the past five years, with a 10.1 percent increase in 2017. Although current average asking rents are at record highs, they remain at a 40 percent discount when compared to the neighboring infill markets of Los Angeles and Orange County, indicating ample room for further growth. Vacancy remains unchanged at 3.7 percent, despite 20 million square feet of deliveries last year, a testament to the market’s unrivaled user demand. Leasing momentum continues to outpace supply, particularly for recently constructed distribution space. This is demonstrated by the 46 percent pre-lease rate for deliveries greater than 1 million square feet last year. The Inland Empire’s proximity to world-class transportation infrastructure, combined with a relatively large supply of recently delivered distribution facilities, creates a highly optimistic future outlook when considering the projected exponential growth of e-commerce. The Inland Empire’s e-commerce primacy of location as it relates to underlying market fundamentals are attracting best-in-class domestic and global capital. This is creating a hyper-competitive buyer …

July 10, 2018

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