E-commerce and the automotive industry drove a resurgent Nashville industrial market in 2013, and we predict another strong, steady year for absorption and investor demand this year. Perhaps the biggest question mark, though, revolves around backfilling second-generation space as its former occupiers move into new build-to-suits. This factor is indicative of robust build-to-suit activity, and while it may increase vacancy early in the year and stall speculative development, the market’s overall health and forward momentum is unquestionable. Nashville’s 200 million-square-foot industrial market closed 2013 with vacancy at 7.9 percent, down from 8.7 percent at the end of 2012, on positive absorption of 3.4 million square feet. The 55 million-square-foot Southeast submarket proved to be the region’s most active, with 1.7 million square feet of net absorption for the year and a vacancy rate of 10.1 percent, followed closely by the East, with 1.6 million square feet of net absorption and a 13.9 percent vacancy rate. Clearly, build-to-suit activity was and is king in Nashville, as it is in many markets. Four build-to-suit projects are currently underway, including distribution centers for Dex Imaging, Allied Modular, Hogebuilt and Panattoni Development Co.’s 240,000-square-foot building for medical products firm Hollister. Panattoni also delivered a …
Industrial
The rapid evolution of e-commerce — including the relationships between the companies that manufacture product and the e-tailers that distribute and sell that product — is arguably the most significant factor impacting the Philadelphia-area and larger regional industrial real estate market today. And for those of us following this phenomenon closely, it feels like we may just be in the second inning of a nine-inning game at Citizens Bank Park. Simply put, e-commerce is creating strong industrial demand. A number of new companies are popping up on the radar, particularly along Pennsylvania’s I-81/I-78 distribution corridor. In the fourth quarter, Walmart’s 1.2 million-square-foot lease at a Liberty Property Trust asset in Bethlehem announced a new neighbor — Walmart again! Adjacent to Liberty’s building will be an additional 1 million square feet to be occupied by Walmart and the space is being developed by Majestic specifically for e-commerce. Earlier in 2013, One Kings Lane leased 500,000 square feet from DCT Industrial in Kutztown. Amazon now has a 4.8 million-square-foot footprint in Pennsylvania with constant threats of additional growth. The list goes on. These sizable transactions drove leasing volume up to nearly 9.7 million square feet at the end of the third quarter …
After years of trailing cities such as Dallas, Memphis and Indianapolis as major bulk distribution centers, Kansas City has emerged as a significant and large hub for the development of Class A industrial logistics centers whose development is backed by institutional money. The trend is transformational for our market and here to stay for three primary reasons: (1) Institutional money — namely life insurance companies — has always allocated a portion of its funds for real estate. That money has found Kansas City. (2) Local Kansas City developers, brokers and property managers are well-suited and eager to accommodate non-operating entities like life insurance companies to buy land, build projects on a speculative basis, lease up and manage the new developments, and sell them when the financial backers decide to cash in on their investments. Kansas City has traditionally been a family-owned real estate development community comprised of five or six major players. None of these families has sold its portfolios to industrial REITs. Thus, there is a niche for institutional-backed, Class A development that is financed with deep pockets and brought to market by local developers. (3) The biggest reason for large-scale Class A industrial development in Kansas City is …
The Dallas/Fort Worth industrial market is one of the healthiest in the country and dodged the recession unscathed. Texas leads the nation in job growth and has now enjoyed six years of economic growth, and the cold hard facts underpin our high-performance industrial marketplace. Some 548,000 jobs have been added to the state of Texas since 2008, and Dallas/Fort Worth ranks third among metro areas in the state for job growth, according to the U.S. Bureau of Labor Statistics. Approximately 1.2 million new residents were added to the Dallas/Fort Worth area from 2000 to 2010. Business Facilities magazine ranks Dallas as the No. 3 center in the U.S. for logistics and distribution, while Fort Worth is ranked No. 5 for aerospace and manufacturing. We know about Houston’s oil and gas-fueled economy, San Antonio’s growing entertainment and defense sector and Austin’s phenomenal growth backed by tech companies and anchored by state government. But what’s up with North Texas and the Dallas/Fort Worth economic drivers? For readers in the developer camp, they will be pleased to know that DFW was on track to have a record year of absorption in 2013 by the time we went to press with this article in …
The Raleigh industrial market dipped slightly in the third quarter of 2013 with negative net absorption, yet overall it improved from a year earlier, in part because of the general health of the North Carolina economy. Four factors are pushing the state’s economic recovery: a manufacturing revival, a construction surge, a boost of college graduates who are attracting knowledge-based industries and an influx of retirees, according to Dr. Michael L. Walden, a North Carolina State University professor and author of a report on the North Carolina economy that was published in the summer of 2013. The combination of factors led Dr. Walden to forecast that North Carolina’s Research Triangle, which includes Raleigh, would have an unemployment rate below 6 percent by the end of 2014. Ironically, some of the positive news for the state’s economy is putting pressure on the region’s industrial marketplace and driving these trends in Raleigh: • Net positive migration and population growth, year-after-year • The loss of industrial development opportunities to the homebuilding industry • Local pressure to prioritize live/work/play environments and de-emphasize industrial development • Constrained land supply • A lack of institutional grade space Consistently ranked by Forbes as one of the best places …
The Boston industrial real estate market is definitely looking up. There has been strong positive absorption of square footage over the last three years, especially in Boston where large industrial facilities are increasingly converted to housing units, and the absorption trend is now spreading further out from the city and expanding across business categories. In Massachusetts, growth is particularly apparent in three key sectors: medical, food and auto parts. Here is a breakdown of how it’s playing out: 1. Medical. The medical field has seen extensive growth over the last couple years, particularly with medical device manufacturing, and that is good news for the industrial market. Owens & Minor, a Fortune 500 company, is the leading distributor of medical and surgical supplies to the acute care market. It added to its presence in the state at 20 Freedom Way in Franklin with a 100,000-square-foot expansion. This is on top of its existing space at 135 Constitution Drive, which totals 227,000 square feet. Another example includes PSS World Medical, an American distributor of medical products, equipment, billing services and pharmaceutical-related products, which is expanding and consolidating two locations into 50,000 square feet at Walpole Park South, in a spec building that …
In its entirety, the Orange County industrial market showed positive net absorption at the closing of 2013. Neighboring markets like Los Angeles and the Inland Empire, however, displayed a more robust recovery when compared to the Orange County industrial market. This reflects a less aggressive, but steady decrease in vacancy at about 4.3 percent — a number that has not been seen since the third quarter of 2008. Most of the market’s leasing activity has been established by users in the less than 100,000 square feet range. A few notable large transactions that took place in 2013: • Cargill, Inc. moving into 184,438 square feet at Fullerton Crossroads • Obey Clothing moving into 170,466 square feet on Michelson Drive in Irvine • Cavotec Dabico US Inc. moving into 159,943 square feet at 5665 Corporate Ave. in Cypress Pointe Rental rates steadily increased in 2013. The average quoted asking rate for available industrial space was $8.49 per square foot, per year at the end of the third quarter of 2013. This represented a 1.3 percent increase in quoted rental rates from the end of the second quarter, as rents were reported at $8.38 per square foot. Although lease rates underwent one …
Considering the city’s recent negative press, as well as the government loans that General Motors and Chrysler both required in order to manage their way through structured bankruptcies nearly five years ago, it is understandable why one would question the economic vibrancy of Detroit and the surrounding region. However, the much-maligned Motor City is actually a lot healthier than the view projected by the city’s high-profile bankruptcy status. The Michigan jobless rate is hovering near 9 percent. While still high compared to other states, the unemployment rate is the lowest it has been since mid-2008. Since March 2012, the state has gained more than 18,000 manufacturing jobs and over 20,000 jobs in other sectors. The U.S. energy boom is making it more cost effective for factories to operate, and Michigan’s manufacturing base is directly benefitting from lower energy costs. In addition to the automotive sector, Michigan industries that thrive include advanced manufacturing, defense, information technology, water technology, medical devices, food processing and logistics and supply-chain management. The rebound in manufacturing has cut metro Detroit’s overall industrial vacancy rate by 400 basis points since the peak of the recession, falling from approximately 14 percent in mid-2010 to 10 percent at the …
Located along the New Jersey Turnpike (I-95) in the geographic center of the Boston-Washington, D.C., corridor, the Exit 8A industrial market is situated 45 miles southwest of Manhattan and 60 miles northeast of Philadelphia. This location enables distributors to reach more than 130 million consumers, one-third of the northern American population, within a one-day drive. With currently 67.48 million square feet, it is the largest submarket in Northern New Jersey. The vacancy is currently dramatically down from the double digits of the recession to 8.4 percent. Asking rents are inching up to the mid-$4 range, NNN, due to the tightening of the market and a shortage of attractive development sites at 8A. National and international tenants are drawn to the submarket’s superior highway access and proximity to the New York/New Jersey ports and Newark Liberty International Airport. The Exit 8A submarket is home to national and international distributors, manufacturers, and logistics firms. Companies with a major presence at Exit 8A include The Home Depot, Pearson Education, ConAgra, Crate & Barrel, FedEx, Costco, William Sonoma, Staples, Iron Mountain, Kellogg’s, Petco, Volkswagen, Ford, LG Electronics, Wakefern, L’Oreal, and Raymour & Flanigan among many others. The 8A industrial market’s desirability is best illustrated …
The Raleigh industrial market dipped slightly in the third quarter of 2013 with negative net absorption, yet overall it improved from a year earlier, in part because of the general health of the North Carolina economy. Four factors are pushing the state’s economic recovery: a manufacturing revival, a construction surge, a boost of college graduates who are attracting knowledge-based industries and an influx of retirees, according to Dr. Michael L. Walden, a North Carolina State University professor and author of a report on the North Carolina economy that was published in the summer of 2013. The combination of factors led Dr. Walden to forecast that North Carolina’s Research Triangle, which includes Raleigh, would have an unemployment rate below 6 percent by the end of 2014. Ironically, some of the positive news for the state’s economy is putting pressure on the region’s industrial marketplace and driving these trends in Raleigh: • Net positive migration and population growth, year-after-year • The loss of industrial development opportunities to the homebuilding industry • Local pressure to prioritize live/work/play environments and de-emphasize industrial development • Constrained land supply • A lack of institutional grade space Consistently ranked by Forbes as one of the best places …