10 Industrial Markets To Watch

by Paul Bubny Globest.com
To paraphrase Humphrey Bogart in Casablanca, when it comes to logistics hubs, we’ll always have Dallas. And Atlanta. And the Inland Empire. However, Colliers International’s Dwight Hotchkiss tells GlobeSt.com that up-and-coming markets will be seeing faster growth this year. The firm has identified 10 emerging markets that are likely to experience the most robust increases in demand from both occupiers and owners.

“In this e-commerce, need-it-now-driven environment, with the primary purpose of warehouse space being to reduce delivery time, these distribution firms all are looking for ways to keep their overall supply chain costs down. There’s a balancing act between cost and the need for more warehouses within a close proximity to large population bases or inland distribution hubs to get products distributed more quickly, so these major retailers, wholesalers and 3PLs really can’t satisfy consumer demand just from core industrial markets anymore. We still believe that the core industrial markets will experience strong demand in the coming year, but the 10 markets we’ve described will see the largest increases in demand.”

Those 10 markets include Columbus, which had a record-breaking year in terms of new supply from construction; Denver, which saw the most product under construction in more than a decade; Phoenix, which ranked #9 for new supply; Greenville-Spartanburg, ranked #6 in the US for overall net absorption as a percent of inventory; Indianapolis, which ranked #6 nationally for overall net absorption; Kansas City, ranked #7 in the US for new supply; Memphis, with the lowest asking rental rate for a US market over 100 million square feet; Nashville, which enjoyed a record-breaking year for product under construction; Los Angeles, where leasing activity increased 4.8% between the third and fourth quarters of last year; the Shenandoah Valley, with a 6.6% overall vacancy rate; and Tampa Bay, ranked #10 in the US for overall net absorption.

“We selected the 10 markets in our report because they checked the boxes of everything an occupier is looking for,” says Hotchkiss. Those criteria: “strategic location, amenities, proximity to a major logistics hub, both available product and land available for development, a business friendly environment and economical rental rates that compare with more mature industrial markets around the country.”

And while e-commerce is obviously a common element, individual markets also have other arrows in their quiver. Take Denver, for example. It also has automotive advanced materials manufacturing and logistics and distribution facilities that serve the Rocky Mountain region. Hotchkiss agrees that each of these markets in its own way represents an extension of one of the major logistics hubs. For example, “Denver plays to the Rocky Mountains and Columbus is a great inland port, with 60% of the US population within a day’s travel.”

What kind of growth will these 10 growth markets see in 2017? “We just put something that has the top five 2016 year to date growth markets in terms of absorption as a percentage of inventory,” Hotchkiss says. “Charleston is on it, Savannah is on it and Reno is on it, and then Stockton and the San Joaquin Valley area are on it. The markets that we have on here as well all have seen significant absorption because of all these new uses or built-upon uses going into them.

And while the industrial sector has seen “a tremendous amount of construction,” Hotchkiss points out that last year there was 230 million square feet under construction and 296 million square absorbed. Much of these new builds have occurred in the major logistics markets, but “I think you’re going to see developers looking more at these emerging markets and the demand going into them, and then start looking at more construction in those marketplaces.”
www.omegare.com