The continued emergence of the e-commerce sector, and continued healthy deal volume among New Jersey’s “traditional” industrial tenants are generating significant momentum for the state’s industrial market. This includes the food, retail and consumer products industries. Strengthening fundamentals have reinforced this theme consistently over the past 24 months, or longer. During 2015, robust demand for modern warehouse space fueled the markets along the New Jersey Turnpike, pushing the state’s warehouse and distribution vacancy to a 15-year low (6.4 percent). This marks a significant five-year drop from a peak of 11.2 percent at the close of 2010. Additionally, the state’s industrial net absorption reached an all-time annual high (12.5 million square feet). Of this, 84 percent occurred within warehouse/distribution product. Big-box demand continues unabated. Currently, we are tracking multiple 1 million-square-foot requirements — the most we’ve seen in many years. Additionally, and importantly, the heightened focus on last-mile delivery is drawing tenants to small and mid-size infill sites. These range from close-in locations providing immediate access to New York City and Philadelphia, to densely populated hubs all along the New Jersey Turnpike. As vacancy rates approach all-time lows and available inventory tightens, an increasing number of deals involve Class B assets. …
GREENVILLE, S.C. — GE (NYSE:GE) has opened the 125,000-square-foot Advanced Manufacturing Works (AMW) plant in Greenville. AMW is GE Power’s first advanced manufacturing facility. The facility will serve as an incubator for the development of advanced manufacturing processes and rapid prototyping of new parts for GE’s energy businesses. These include power, renewable energy, oil and gas, and energy connections. GE has invested $73 million in the facility to date and will invest another $327 million across the GE Power Greenville campus over the next several years. The new facility created approximately 80 engineering and manufacturing jobs, according to GE. The company broke ground on the facility in mid-2014. “This facility will ignite the digital industrial revolution for our company and the industry,” says Steve Bolze, GE Power’s president and CEO. “We’re building a skilled workforce and culture that’s devoted to delivering breakthrough innovations that deliver better, faster outcomes for our customers and unlock new productivity and growth.” GE entered the Greenville market more than 40 years ago with a 340,000-square-foot property. That site has now grown close to 1.7 million square feet of factories, offices and laboratories focused on manufacturing advanced products for worldwide distribution. GE has more than 3,200 …
A rebounding economy and robust population growth are driving strong fundamentals across all segments of Raleigh-Durham’s commercial real estate industry. The region added 30,105 jobs during the 12 months ending September 2015, a growth rate of 3.1 percent. Users of all product types are facing rising occupancy costs and fierce competition for quality space. The Raleigh-Durham industrial market experienced positive net absorption of 721,185 square feet through the first three quarters of 2015, marking the sector’s fifth consecutive year of expansion. Increased tenant demand, combined with a lack of new construction, has driven vacancy back to pre-recession levels. Overall vacancy for warehouse and flex space ended the third quarter at 7.5 percent, down by 130 basis points year-over-year. Warehouse vacancy fell by 160 basis points to 6 percent during the same period and is down from a cyclical high of 10.2 percent. Flex vacancy ended the third quarter at 11 percent, down by 60 basis points year-over-year and from a cyclical high of 16.5 percent. Leasing activity has been broad based, driven primarily by organic growth in the region’s existing tenant base. Among the industries fueling the largest transactions are third-party logistics, e-commerce, manufacturing and housing and construction. Finally back …
It is difficult to find one aspect of the Omaha industrial market to highlight when recapping 2015. Quite frankly, about every single facet of the market improved last year: sale prices ticked up, land prices rose, absorption was positive, the vacancy rate was low, asking rental rates climbed, and there was plenty of new construction. There are no signs of this momentum slowing. What is even more telling is the steady trend in the same direction — the market has shown signs of improvement each of the last five years. There have not been one or two transactions skewing the metric. Sales prices of existing industrial property averaged $56 per square foot in 2015, and over 2 million square feet of inventory was sold. This is quite a jump over the average of $47 per square foot in 2014. We believe this uptick in sales prices is due to a number of factors, but most notably a combination of high demand, low inventory of platted industrial lots and high construction costs. Users have been forced to make a choice — build new product or rehab existing buildings. This dilemma has created a bit of an odd and possibly concerning scenario: …
Mexico is what drives El Paso. Mexico is the dog and El Paso is the tail. When the dog is happy the tail gets to wag, and we’re wagging pretty hard right now. The El Paso industrial market hasn’t been this strong since at least 1990. Juarez, Chihuahua, El Paso’s Mexican counterpart directly across the border, posted a third consecutive year of positive industrial absorption in 2015. Build-to-suit development activity is at a level not seen in five years. As a direct result, El Paso’s industrial vacancy rate dipped below 9 percent in the fourth quarter of 2015, the strongest tenancy performance in nearly a decade, according to Cushman & Wakefield | PIRES International. All the leasing activity we’ve been seeing has been chewing into the city’s vacancy rate. El Paso’s Class A vacancy rate is now below 2 percent. For example, in February, Los Angeles-based BH Properties leased a 409,000-square-foot industrial space located at 9600 Pan American Drive between Interstate 10 and the Rio Grande to a subsidiary of Sweden-based Electrolux Group. Electrolux Group chose the location because it is near the Zaragoza Bridge, El Paso’s far-east port of entry, providing convenient access to the company’s plant across the …
The Toledo industrial real estate market continued its steady improvement in the second half of 2015. Tenant demand for space was solid at a time when virtually no new speculative space was added, which led to a shrinking vacancy rate. At the end of 2015, the vacancy rate stood at 6.8 percent, down from 7.2 percent at mid-year and 7.7 percent at the end of 2014. The market absorbed 564,947 square feet in the last half of 2015 on top of the 632,775 square feet absorbed in the first half of the year. With vacancy rates contracting, the overall average asking rental rate in the Toledo industrial market rose 10 cents to $3.14 per square foot between June 2015 and the end of the year. We have commented in prior reports on the dearth of new speculative construction in the region. This trend continues. Only one speculative building has been constructed in the market since well before the Great Recession. That building — a 100,000-square-foot warehouse/distribution building located in Overland Industrial Park in the North Toledo submarket and developed by Harmon Family Properties — was delivered in the second half of 2015. As of December 2015, the building was still …
The greater Indianapolis industrial market has experienced incredible growth over the past three years, and it continues to be one of the most sought-after industrial markets in the country. Supply and demand is the big story in early 2016. Because shovel-ready land is difficult to find, demand for land alternatives is pushing development further and further away from the beltway while simultaneously causing land prices to escalate. Local communities that figure out how to competitively bring shovel-ready land to the market will reap great rewards. There is strong demand for space across the industrial sector, with second-generation and medium-size distribution space outpacing the other industrial product types. Those seeking smaller, single-tenant buildings under 50,000 square feet are realizing how difficult they are to find. Additionally, the supply of available speculative space in the greater Indianapolis market has been on everyone’s radar for the past two years. Demand for spec space is catching up to the supply as evidenced by several new leases signed since the end of 2015. Currently, there is approximately 2.2 million square feet of industrial product under construction, including 1.4 million square feet of speculative development and 800,000 square feet of build-to-suit construction. Game changer The e-commerce …
Metro Philadelphia’s industrial market saw strong demand, developer confidence and declining vacancy rates in 2015. Asking rents averaged $4.43 per square foot for the region, a 4 percent increase from 2014. The overall vacancy has decreased to 7.7 percent as demand kept pace with 5.7 million square feet of completed spec development. The only submarket that is posting greater than 10 percent vacancy is New Castle County, Delaware; however, New Castle’s vacancy rate was trending downward at the end of 2015. We continue to see healthy demand for industrial space in 2016. There could be some impact from global uncertainties, but these will be offset by continued on-shoring of manufacturing requirements and last-mile delivery expansion. Companies seeking between 25,000 to 80,000 square feet have seen limited availability in most submarkets, particularly for purchase. Due to strong demand and reduced availability for modern, net-leased, single-tenant buildings, some investors must consider lesser-quality assets and/or secondary locations. Sale prices and rents have increased. It is not unusual for modern bulk facilities with long-term leases in place to trade in the $90-per-square-foot range. In one recent deal, a private investor paid more than $78 per square foot for the leaseback transaction of an 85-year-old …
Metropolitan Milwaukee has experienced a robust industrial real estate market for the past several years. This strength should continue in 2016 and for the foreseeable future. Like many other metro areas, Milwaukee’s industrial sector experienced slow but steady economic growth as it emerged from the Great Recession. However, unlike many other metro areas, Milwaukee has not yet exhibited a strong uptick in new industrial development. Minimal speculative construction has occurred during the past few years. Consequently, while demand for industrial space has continued to increase, supply has remained fairly flat. This phenomenon of increased absorption without a corresponding increase in new product coming to market has driven down the overall vacancy rate to slightly under 5 percent, near a record low, according to Xceligent. Moreover, the new industrial development that has occurred has been primarily driven by users expanding, relocating or consolidating existing facilities, or by new build-to-suit or speculative developments undertaken by Milwaukee-based firms such as Zilber Property Group, Luterbach Properties, Briohn Building and Wangard Partners. Larger regional and national industrial developers such as Centerpoint Properties and First Industrial Realty Trust, which once drove industrial development in Milwaukee, ceased construction in Milwaukee during the Great Recession and have not …
New industrial demand in the Washington, D.C., metropolitan region has come not only from its strong service economy, but also a rapidly growing consumer goods supply chain, e-commerce distribution seeking speed of delivery, data centers and even government contractors. Both occupiers and investors seek modern, state-of-the-art building design and features. The Washington metro industrial market (185 million square feet inclusive of flex space) was well into the single digits with a sub-9 percent vacancy rate as of the third quarter of 2015. New construction has returned with 2.7 million square feet poised for delivery. The overall market is fairly balanced between suburban Maryland and Northern Virginia comprising 88.3 million square feet and 87.3 million square feet, respectively. The remaining 9.3 million square feet is located in the District of Columbia. Vacancy has been on a downward trajectory for the region as a whole. The current 8.8 percent rate represents a drop of 100 basis points compared with the third quarter of 2014. The largest industrial market is found in Prince George’s County, Md., and totals 52 million square feet of industrial and flex space. Prince George’s County also anchors the south end of the Baltimore-Washington I-95 Corridor. If the adjacent …