One might expect that the industrial real estate market is in rough shape in a state with a projected $1.7 billion state budget deficit, where the capital city (Hartford) has discussed bankruptcy, and where one of the most famous employers (General Electric) has moved out — not to mention the state’s high taxes and high wages. However, the industrial real estate market is one of the tightest I’ve seen in Connecticut in more than 31 years. Each region in the state is experiencing varied levels of success, but overall the industrial market is healthy, with dropping vacancy rates, increasing rental rates, and decreasing cap rates. The game changer is big box distribution and third-party logistics activity throughout the region. In a market where a 75,000-square-foot deal used to be major news, we have seen numerous leases and new construction deals over 200,000 square feet in the past two years. E-commerce activity includes Amazon (1.5 million square feet in Windsor), FedEx (550,000 square feet in Middletown), and UPS (239,000 square feet in Windsor). Other significant transactions include Trader Joe’s (750,000 square feet in Bloomfield), Mobis Parts America (291,000 square feet in South Windsor), Vistar NE (296,000 square feet in South Windsor), …
At the end of the first quarter 2017, the Houston industrial market finds itself in very familiar territory, with several dominant trends largely maintaining course. Despite continued struggles within the oilfield manufacturing sector, the overall market is still in very good shape. Large consumer goods distributors driven by population growth in the greater Houston area and plastics users responding to increased demand from expanded chemical plant capacities produce the headliner transactions in the current market. This has been the case for the last 12 to 24 months. While leasing and sales for existing manufacturing facilities have slowed in recent years, there are some bright spots to report. CoStar notes an overall market vacancy increase of less than 0.5 percent to a still-historically low 5.7 percent. Northwest and Southeast Houston lead the way in terms of major activity. Northwest Houston currently has 5.1 percent vacancy, driven by consumer product companies like Serta Mattresses, which leased 268,482 square feet at Trammell Crow’s Fallbrook Pines, and Shaw Carpet, which leased 201,600 square feet at Prologis Jersey Village. These firms are inking long-term deals for manufacturing and distribution hubs, reflecting their confidence in the area’s long-term consumer growth. Multiple large positions from FedEx and …
The Atlanta industrial market continues to grow in popularity when it comes to real estate investors’ appetite. Industrial assets are “hot items” in current investment sales transactions as the region’s economic momentum continues to position Atlanta as one of the healthiest industrial markets in the Southeast. Some of the major local and macro-economic trends affecting the industrial market include the ongoing growth of infrastructure, logistics and manufacturing industries. Furthermore, the Port of Savannah’s new Post Panamax facilities, its ongoing investment and expansion plans and its increasing activity are also beneficial to the Atlanta industrial market. Investment sales professionals, especially individual investors, remain attracted to Atlanta’s industrial market as e-commerce continues to transform how and where products are stored and shipped, not to mention the simplicity of owning and managing industrial properties, compared to retail and office. In 2016, the Atlanta industrial market experienced over 17 million square feet of net absorption. The forecasted absorption for 2017 ranges between 12 and 14 million square feet, with approximately 12 million square feet of new product being delivered this year. Over 90 percent of the new product comprises warehouse/distribution product, and less than 10 percent consists of new flex and shallow-bay buildings. Most …
With limited inventory and historically high values and rental rates, it’s safe to say the Los Angeles industrial market is enjoying an all-time high. There are several factors contributing to ongoing strength in the market, including a healthy appetite for acquisitions, strong tenant activity and creative solutions to adapt to supply constraints and maximize ROI. Industrial buyers continue to be active in Los Angeles, even with tightening availability and compressing cap rates. The fact is, there is still tremendous value to be found in this gateway city. Interest rates remain low, and those looking to acquire properties know that the sooner they buy, the better. Conversely, sellers are not especially eager to dispose of properties in the current market, based primarily on the challenge in finding acquisition-worthy assets. Specifically, owners seeking 1031 exchanges are finding it increasingly difficult to identify properties to trade into. That said, values are high enough that some owners are selling and choosing to simply pay taxes on capital gains or look to other markets for product to acquire. For example, Daum recently helped a seller dispose of a property in Los Angeles and reinvest those funds into an asset in Cleveland, Ohio, at a 7 …
Denver’s industrial market has had an impressive run so far this economic cycle – so much so that the top-of-mind-question is, “Where do we go from here?” Last year was a prolific year, attracting new investors, delivering 4.5 million square feet of Class A space and posting the fifth straight year of sub-5 percent vacancy. But the outlook for 2017 is brighter given Denver’s strong economic foundation, the arrival of e-commerce users and delivery of much-needed warehouse inventory. E-commerce Arrives in a Big Way E-commerce arrived in Denver in 2016 but is only just rolling out. Construction began earlier this year on a 1.1-million-square-foot fulfillment center, which will be the market’s largest industrial building upon completion. Several other last-mile e-commerce facilities are opening in the region that are intended to provide same-day or fresh food delivery. The local e-commerce footprint is approaching 3 million square feet in total. E-commerce companies are actively securing sites in Denver largely in response to the region’s explosive population growth. Colorado was the second-fastest-growing state in 2015, and Colorado’s Front Range communities are home to more than 5 million people. Between 2010 and 2016, Denver added nearly 1,000 new residents a week and ranked 12th …
As Chicago has emerged as one of the country’s top tech capitals, large parcels of land across the city -— many set aside for manufacturers that no longer do business there — have remained stuck in the past, serving as roadblocks to billions of dollars in new real estate development. That’s about to change thanks to a yearlong effort spearheaded by Mayor Rahm Emanuel and the city’s Department of Planning and Development, which recently approved recommendations for modernizing the first of 26 industrial corridors across the city. The recommendations are the result of a community engagement process that solicited feedback from various stakeholders, including our firm and other real estate developers. The plan will pave the way for new residential and commercial projects throughout the North Branch Industrial Corridor, which stretches from Kinzie Street to just north of Fullerton Avenue along the Chicago River. These investments, which include much-needed infrastructure and open space initiatives, will engage the adjacent riverfront and create mixed-use environments. The early years In the 1980s, the city of Chicago designated a series of industrial corridors and Planned Manufacturing Districts (PMDs) — many along waterways and railways — to protect the city’s industrial base from encroachment by …
The latest CoStar Industrial Report for Providence reports that 2016 ended on a positive note on many fronts for the industrial real estate sector. The Providence industrial vacancy rate overall was down to 4.6 percent, a steady drop from 4.8 percent at the end of third quarter 2016, 5.3 percent at the end of second quarter 2016 and 6.4 percent at end of first quarter 2016. Flex projects showed a vacancy rate of 7.1 percent at end of fourth quarter 2016, a sharp drop from a rate that held largely steady for most of 2016 (11.4 percent for end of third quarter 2016, 11 percent at end of second and 11.5 percent at end of first quarter). For warehouse projects, the vacancy rate at the end of fourth quarter was just 4.4 percent, no change from end of third quarter, but down from 5 percent at end of second quarter and 6 percent at end of first quarter. It’s more good news for the state’s industrial outlook that the current administration has prioritized bringing businesses and jobs here. There’s evidence in the CoStar report to support that claim. Look at the third-largest lease signing of 2016. It was enacted by …
When comparing Birmingham’s industrial market to other major cities in the Southeast, “The Tortoise and the Hare” comes to mind. Birmingham has had slow and steady progress — not to say that our sister cities have periods of laziness and napping. Birmingham’s current pace of activity is more the norm and thankfully the trends remain positive with 2016’s transaction numbers actually tilting in the direction of a “hare-like” pace. Occupancy rates for the 15 million-square-foot, multi-tenant industrial market eclipsed 90 percent for the first time since 2005. We had positive absorption of over 400,000 square feet with just under 1.5 million square feet of inventory remaining. During 2016, 12 new lease transactions of 50,000 square feet and larger were completed, eight of which were automotive related. These 12 transactions compare to seven and eight in 2014 and 2015, respectively, which is a strong increase. Leases of note include 270,600 square feet to a third-party logistics provider for Mercedes-Benz; 240,240 square feet to Grupo Antolin, a Spanish-based supplier of interior parts for Mercedes-Benz; and a 225,496-square-foot lease directly with Mercedes-Benz. Much of the remaining 1.5 million square feet of inventory is Class B or lower quality, so finding suitable space has …
A common baseball analogy that explains where we are in the real estate cycle is “What inning are we in?” Regardless of the inning, in North Texas we’re just hoping it’s the first game of a doubleheader! The first quarter of 2017 was another respectable one for leasing activity in the Dallas-Fort Worth (DFW) industrial market. Total absorption for all properties was 5.5 million square feet, with 6 percent vacancy across 786.5 million square feet of industrial space. New supply totaled 6.6 million square feet for the first quarter. Just over 8 million square feet of new construction is underway in DFW, with 15 million square feet designated “big box,” or more than 200,000 square feet. Big box experienced absorption of 4.6 million square feet in the first quarter, despite having only 3.8 million square feet of new supply. The metroplex has been the beneficiary of some very large lease signings. Amazon alone is responsible for multiple leases totaling several million square feet. UPS recently leased a 1 million-square-foot property in Arlington, and Ashley Furniture announced the purchase of 358 acres in Mesquite for an 850,000-square-foot design/build distribution facility. In addition, a 1.4 million–square-foot, build-to-suit lease by a well-known real …
A snapshot of Toledo’s industrial real estate market at the end of 2016 reveals a well-performing sector, maintaining the steady improvement recorded during the prior year. In fact, the vital signs of the property sector hit some of their best levels in a decade last year. By the end of the year, every key metric was up from midyear 2016 and year-end 2015. One bit of cloudiness trying to sneak in on the otherwise very sunny picture, however, is the limited supply of available space options. Demand clearly exists for additional space, but users are unable to find options that fit their needs. The dearth of adequate space alternatives is restraining potential transaction volume and, by extension, probable job growth. By Toledo standards, the market has been absorbing an impressive amount of space over the past several years. Overall, the 85 million-square-foot market absorbed 763,065 square feet in the second half of 2016. However, as strong as the absorption numbers have been, it is easy to speculate they would be much higher if more of the right kind and sizes of space existed in the market. There is a shortage among all building sizes, but the need is most acute …