10 Emerging

U.S. Industrial Markets

to Watch in 2017

10 Emerging

U.S. Industrial Markets

to Watch in 2017

More

In today’s e-commerce-driven “need-it-now” environment, a primary purpose of warehousing is to reduce delivery lead time—the time between a customer placing an order to receiving it on their doorstep—while keeping overall supply chain costs down.


This balancing act between cost and proximity to consumers and distribution hubs is driving many retailers and wholesalers to seek out modern facilities in secondary markets. In particular, this shift is rapidly improving fundamentals near inland ports, seaports and large population centers.


While core industrial markets in New Jersey/Pennsylvania, the Inland Empire, Atlanta, Chicago, Houston and Dallas will continue to thrive, we believe these 10 emerging U.S. industrial markets are positioned to experience the most robust increases in demand from both occupiers and owners.

Each of these markets is unique, but they share advantages such as nearby logistics hubs, attractive rental rates, land available for development, large nearby populations, pro-business atmospheres and skilled workforces.


In 2017, it just might pay to get to know these 10 rising stars of the U.S. industrial market.

Industrial Services Contact:
Pete Quinn, SIOR
National Director, Industrial Services | USA
+1
317 713 2107
pete.quinn@colliers.com

Research Contact:
James Breeze

National Director of Industrial Research | USA
+1 909 937 6365
james.breeze@colliers.com

Columbus

At 6.4 million square feet, 2016 was a record-breaking year for Columbus in terms of new supply from construction.

“Located within an overnight truck drive of 47% of the U.S. population, Columbus is poised to be one of the most exciting industrial markets in the country. A Midwest leader in population, jobs and GDP growth, the Central Ohio region has more than 4,100 logistics and distribution operations that employ more than 80,000 people. Because of its strategic location, Columbus is crossed by eight major interstate highways, allows for double-stacked intermodal trains from the East Coast and is home to the most active foreign trade zone in the nation.” James Garrett, Executive Vice President & Managing Director | Columbus

Key Strengths:

The crossroads of Interstate 70 and Interstate 71, in conjunction with the availability of large tracts of developable land, make Columbus attractive to logistics providers and retailers. The e-commerce sector and third-party logistics providers are the primary demand generators, particularly in the West, East and Southeast submarkets. Amazon recently completed two fulfillment centers totaling 1.9 million square feet in two of these key submarkets.

Logistics Driver:

The Rickenbacker Inland Port serves as a hub for importing and exporting freight via air and rail, positioning Columbus to take advantage of future increases in shipping to East Coast ports.

Vacancy:

After peaking at 15% in mid-2010, the Columbus warehouse/distribution sector has experienced robust activity and the vacancy rate plummeted to 5.4% at the end of 2016.

Absorption:

Robust demand skyrocketed overall net absorption in 2016 to 8.7 million square feet—by far the most absorption on record in Columbus. This amount of absorption is also nearing numbers posted only in core industrial markets throughout the country.

Development:

Since 2010, Columbus has seen a gain in occupancy of 26 million square feet and only 19 million square feet of new inventory. This combination of factors has contributed to tightening market conditions and the surge in construction activity over the past three years.

Asking Rents:

Despite robust industrial fundamentals, asking rental rates are stable in Columbus and finished 2016 at $3.36 per square foot per year NNN. These economic rental rates will be a driving force for activity in the coming year. 

More

Columbus Key Statistics

  Inventory Overall Vacancy Rate Overall Net Absorption New Supply (Construction) Under Construction Asking Rental Rate (PSF/YR)
2007
201,794,414 12.2% (806,662) 419,106 760,183 $2.93
2008
202,580,021 12.7% (1,581,644) 785,607 281,787 $2.98
2009
203,139,228 12.3% 885,489 559,207 170,000 $2.87
2010
205,420,829 12.7% (766,901) 1,575,000 $2.57
2011
213,907,798 11.9% 3,090,018 1,975,000 898,000 $2.99
2012
211,821,516 7.8% 4,938,885 448,655 924,103 $2.99
2013
214,773,178 5.9% 4,827,869 1,548,853 2,654,000 $3.06
2014
219,592,033 5.4% 5,189,369 5,390,062 4,254,971 $3.18
2015
225,876,317 6.4% 2,306,111 5,900,438 4,049,297 $3.35
2016
232,344,037 5.4% 8,760,860 6,367,251 2,354,000 $3.36
 

Key Statistics by Property Size

  Overall Vacancy Rate 2015 Overall Vacancy Rate 2016 Asking Rental Rate 2015 Asking Rental Rate 2016
10,000-24,999 SF
2.0% 4.1% $5.40 $5.72
25,000-49,999 SF
3.1% 1.9% $5.30 $5.64
50,000-74,999 SF
3.0% 2.1% $4.66 $4.90
75,000-99,999 SF
5.1% 2.7% $5.09 $4.92
100,000-249,999 SF
9.5% 5.2% $3.60 $3.57
250,000-499,999 SF
9.7% 8.8% $3.11 $3.18
500,000 SF +
6.0% 6.3% $3.44 $3.11

DENVER

2016 saw the most product under construction in more than a decade at 3.6 million square feet.

“Denver is thriving thanks to an abundance of high-paying jobs that have attracted more than 150,000 people to the area between 2010 and 2015. Denver supports the largest geographic distribution market in the country servicing an eight-state region. Besides the economic diversity of the metro Denver area, the state of Colorado is well-known for being a recreational paradise for outdoor enthusiasts. This is attracting a young, burgeoning workforce looking for employment opportunities with work-life balance.” Brad Calbert, President | Denver

Key Strengths:

E-Commerce is a driving factor in Denver's industrial sector, as companies add distribution centers in the Rocky Mountain hub. In particular, Walmart and Amazon have taken significant industrial positions in response to the exploding e-commerce business. Denver has also benefited from the post-recession geographic distribution of capital, as U.S. investors continue to exhibit confidence in the transportation and logistics hub of the Rocky Mountain region.  

Logistics Driver:

Metro Denver has made significant improvements to the region's transportation infrastructure in the past decade. 

Vacancy:

While vacancies increased slightly to 4.6% in 2016, vacant space remains significantly lower than the 9% rate posted in 2011.

Absorption:

Despite higher vacancies as a result of new construction, the pace of overall net absorption remains strong. 2016 marked the fifth consecutive year of occupancy gains in the Denver market and 2.5 million square feet in absorption.

Development:

In 2016, industrial construction activity reached its highest level in 15 years with more than 3.6 million square feet under construction, of which a large percentage is pre-leased.

Asking Rents:

Speculative development has increased dramatically over the past year as asking rental rates have reached levels where new construction is feasible despite historically high construction costs.

More

Denver Key Statistics

  Inventory Overall Vacancy Rate Overall Net Absorption New Supply (Construction) Under Construction Asking Rental Rate (PSF/YR)
2007
219,694,315 8.5% 3,071,831 3,507,994 2,304,860 $5.53
2008
220,551,438 8.5% 582,152 3,937,184 546,934 $5.62
2009
220,861,197 8.9% (478,020) 605,529 885,354 $5.43
2010
220,568,967 8.6% 285,523 967,210 124,590 $5.30
2011
220,317,486 9.0% (943,946) 275,840 734,481 $5.17
2012
220,117,633 7.9% 2,183,799 665,984 1,565,607 $5.21
2013
217,478,167 5.6% 2,642,900 1,697,899 2,405,310 $5.82
2014
220,145,679 4.0% 5,988,117 3,169,841 1,634,802 $6.67
2015
221,276,196 4.2% 609,335 1,693,939 3,071,067 $7.75
2016
224,801,200 4.6% 2,532,804 4,682,186 3,620,525 $7.95
 

Key Statistics by Property Size

  Overall Vacancy Rate 2015 Overall Vacancy Rate 2016 Asking Rental Rate 2015 Asking Rental Rate 2016
10,000-24,999 SF
2.2% 2.4% $8.91 $9.52
25,000-49,999 SF
2.8% 2.7% $9.44 $9.43
50,000-74,999 SF
5.4% 3.5% $7.97 $8.06
75,000-99,999 SF
3.2% 3.5% $7.83 $8.00
100,000-249,999 SF
3.0% 3.8% $6.25 $6.50
250,000-499,999 SF
8.9% 10.6% $6.00 $6.00
500,000 SF +
7.1% 6.0% $6.00 $6.25

Greater phoenix

Ranked #9 in the U.S. for new supply in 2016

“The Greater Phoenix industrial market has been in expansion mode for the past few years, with large tenants leasing spaces and developers bringing speculative and build-to-suit projects through the pipeline. Even with new projects coming online, vacancies are tightening and rents are on the rise, reflecting the overall strengthening in the industrial market. Local economic expansion should accelerate in the years ahead as housing starts and permits pick up to meet demand driven by population growth and in-migration from other markets.” Bob Mulhern, Senior Managing Director | Phoenix

Key Strengths:

The Greater Phoenix industrial market continues to post exceptional growth because of its proximity to a growing population in the Southwest, a strong workforce base, a modernized highway system and more attractive rental rates compared to markets in Southern California. 

Logistics Driver:

Phoenix recently expanded its local interstate system, and its location along Interstate 10 gives the market a significant logistical advantage in reaching the Southwest populace.

Vacancy:

Leasing activity from a diverse tenant pool accelerated in 2016, driving down the vacancy rate. At 10.2% in 2016, the vacancy rate reached its lowest point since late 2007.

Absorption:

Net absorption has been consistently strong, averaging nearly 7.5 million square feet annually since 2014. The second half of 2016 was on par with this trend, with 4 million square feet absorbed.

Development:

While the pace of post-recession development peaked in 2014, a robust 5 million square feet were completed in 2016 with an additional 6.5 million square feet slated to be delivered in 2017.

Asking Rents:

Asking rents have trended higher over the past five years, with annual growth averaging more than 3.5% over that time period. In 2016, asking rents rose more than 4% in the Greater Phoenix industrial market. 

More

Greater Phoenix Key Statistics

  Inventory Overall Vacancy Rate Overall Net Absorption New Supply (Construction) Under Construction Asking Rental Rate (PSF/YR)
2007
248,041,943 9.4% 6,554,099 11,666,079 8,848,636 $7.81
2008
259,513,963 13.8% (1,172,627) 11,472,020 3,466,868 $7.34
2009
263,129,260 16.8% (4,707,093) 3,615,297 1,418,684 $6.20
2010
264,969,155 15.5% 5,052,123 1,839,895 420,737 $5.72
2011
265,761,221 13.1% 6,862,517 792,066 4,076,105 $5.57
2012
268,710,769 11.9% 5,898,024 2,949,548 5,737,060 $5.81
2013
274,548,993 12.2% 4,314,100 5,838,224 5,340,725 $6.01
2014
281,612,864 11.5% 8,167,059 7,063,871 4,337,424 $6.04
2015
286,999,694 10.6% 7,455,676 5,386,830 3,503,615 $6.42
2016
291,909,804 10.2% 5,792,834 5,189,398 3,665,106 $6.65
 

Key Statistics by Property Size

  Overall Vacancy Rate 2015 Overall Vacancy Rate 2016 Asking Rental Rate 2015 Asking Rental Rate 2016
10,000-24,999 SF
5.9% 5.1% $8.16 $8.51
25,000-49,999 SF
8.9% 7.4% $7.44 $7.85
50,000-74,999 SF
10.3% 7.9% $7.61 $8.26
75,000-99,999 SF
11.8% 13.7% $7.60 $8.49
100,000-249,999 SF
12.5% 12.4% $6.45 $6.33
250,000-499,999 SF
14.5% 13.7% $4.42 $4.73
500,000 SF +
13.5% 13.2% $4.30 $4.36

Greenville-Spartanburg-Anderson

Ranked #6 in the U.S. for overall net absorption as a percent of inventory in 2016 (3.9%)

“The Greenville-Spartanburg-Anderson market is an industrial powerhouse. The region sits halfway between Atlanta and Charlotte on Interstate 85, has dual rail connections and is connected to the Port of Charleston by Interstate 26. The market’s competitive business climate is sustained by the nation’s lowest unionization rate (2.1%), access to economical and dependable energy, a deep pool of advanced manufacturing workers and a proven workforce development program in the South Carolina Technical College System. The region is home to 500 foreign-owned companies from 34 different countries—making it a validated location for foreign direct investment.” David Feild, Market President | Greenville 

Key Strengths:

Plentiful land for development, along with close proximity to the ports of Charleston and Savannah, has some dubbing the Greenville-Spartanburg-Anderson market as the future “Inland Empire of the East Coast.” Three growing industrial fields dominate the area: automotive (anchored by BMW and Michelin), advanced materials manufacturing (supporting the specialty textiles industry serving Boeing and the automotive sector) and the logistics and distribution facilities that serve the southeastern United States. 

Logistics Driver:

In addition to the seaports, the market’s Inland Port Greer (SCSPA) and access to Interstates 85 and 26 is attracting a diverse group of tenants to the area. 

Vacancy:

Robust demand continues to drive the vacancy rate down, finishing 2016 at 6.9%—a historic low for the market.

Absorption:

Lower vacancies were a direct result of record amounts of overall net absorption in 2016. More than 7.7 million square feet were absorbed—nearly double the previous record in 2007. 

Development:

Robust demand from the distribution, automobile and manufacturing industries significantly increased development in 2016 with a record 8.5 million square feet of new construction. While only 2.7 million square feet are currently under construction, another 4.8 million square feet are planned. A rapidly growing automobile manufacturing industry and projected import increases at Charleston are expected to keep the pace of development robust in 2017. 

Asking Rents:

Despite dwindling vacancies, asking rental rates were stable in 2016 at $3.28 per square foot per year, making the market one of the most economical in the entire country.

More

Greenville-Spartanburg-Anderson Key Statistics

  Inventory Overall Vacancy Rate Overall Net Absorption New Supply (Construction) Under Construction Asking Rental Rate (PSF/YR)
2007
179,875,407 8.8% 3,909,679 1,634,728 1,093,409 $2.98
2008
181,243,691 8.0% 2,616,415 1,368,284 1,256,800 $3.26
2009
182,583,304 9.6% -1,710,394 1,339,613 0 $3.23
2010
182,583,304 9.4% 508,165 0 140,000 $2.91
2011
182,723,304 8.8% 1,074,975 140,000 964,000 $2.86
2012
184,783,414 8.8% 1,941,594 2,060,110 10,000 $2.86
2013
184,843,414 7.8% 1,861,982 60,000 2,057,967 $2.86
2014
186,973,381 7.1% 3,295,249 2,129,967 3,337,738 $3.10
2015
189,158,221 7.1% 2,017,412 2,184,840 7,474,513 $3.28
2016
197,588,037 6.9% 7,751,392 8,475,743 2,666,338 $3.28
 

Key Statistics by Property Size

  Overall Vacancy Rate 2015 Overall Vacancy Rate 2016 Asking Rental Rate 2015 Asking Rental Rate 2016
10,000-24,999 SF
4.9% 3.5% $3.87 $3.92
25,000-49,999 SF
5.7% 5.6% $3.52 $3.54
50,000-74,999 SF
8.1% 7.3% $2.86 $3.04
75,000-99,999 SF
2.4% 4.6% $2.72 $2.96
100,000-249,999 SF
11.1% 9.4% $3.21 $3.17
250,000-499,999 SF
12.4% 13.8% $3.32 $3.32
500,000 SF +
1.3% 2.4% $4.03 $3.35

Indianapolis

Ranked #6 in the U.S. for overall net absorption in 2016 (up from #25 in 2015)

“Known as the ‘Crossroads of America,’ the Indianapolis market has the distinct geographic and logistical advantage of being the intersection point of eight interstate systems. As a result, 75% of U.S. and Canadian populations can be reached in a day’s drive. With waterway access to the north Chicago area and to the south Louisville area, it may surprise some that Indiana ranks sixth in the U.S. for waterborne shipping and boasts the only statewide port system with direct waterway access to two U.S. coasts. Indiana also continues to earn top marks for its appealing tax structure and business-friendly regulatory environment.” Brian Zurawski, Executive Vice President & Co-Market Leader | Indianapolis

Key Strengths:

Developers continue to find competitive land opportunities and favorable pricing in the Indianapolis industrial market, leading to more than 20 million square feet of industrial development since 2013. The Indianapolis International Airport is also the sixth-largest U.S. cargo system. The state’s business-friendly climate incentivizes development with tax abatements while the Indianapolis area lures operations with a deep labor pool.

Logistics Driver:

Indianapolis’ central location in the Midwest makes it a logical e-commerce hub. It is also home to the second-largest FedEx hub in the world, which is a key component to the market’s success. 

Vacancy:

Robust demand, particularly for large, modern bulk distribution centers, lowered the overall vacancy rate from 8% in 2015 to 5.4% in 2016.  

Absorption:

After averaging 3.95 million square feet annually since 2008, overall net absorption reached 9.9 million square feet in 2016—making Indianapolis one of the top 10 markets in the country in terms of overall net absorption. 

Development:

The variety of speculative supply being developed in Indianapolis can appeal to a wide range of users. Because of this, nearly 4 million square feet of product completed construction in 2016 and another 6.4 million square feet is underway at the beginning of 2017.

Asking Rents:

With low asking rental rates (below $4 per square foot NNN market-wide), users are increasingly looking to Indianapolis as a well-priced option for distribution operations in the Midwest.

More

Indianapolis Key Statistics

  Inventory Overall Vacancy Rate Overall Net Absorption New Supply (Construction) Under Construction Asking Rental Rate (PSF/YR)
2008
198,186,427 8.2% 4,050,347 2,241,819 3,405,520 $3.80
2009
204,229,286 9.3% 2,067,436 4,475,397 154,915 $3.55
2010
206,056,960 9.1% 1,799,995 304,692 1,555,980 $3.60
2011
209,426,849 7.0% 6,466,018 1,782,980 351,200 $3.48
2012
213,349,231 6.6% 3,163,033 1,695,964 3,712,931 $3.64
2013
218,634,616 6.8% 3,856,505 4,293,185 3,232,226 $3.56
2014
225,056,692 6.6% 6,669,919 6,400,014 5,538,397 $3.81
2015
232,253,790 8.0% 3,527,552 7,032,698 2,646,105 $3.78
2016
236,925,857 5.4% 9,896,887 3,928,442 6,389,933 $3.83
 

Key Statistics by Property Size

  Overall Vacancy Rate 2015 Overall Vacancy Rate 2016 Asking Rental Rate 2015 Asking Rental Rate 2016
10,000-24,999 SF
4.6% 5.1% $5.97 $6.30
25,000-49,999 SF
6.0% 5.0% $5.40 $5.64
50,000-74,999 SF
5.8% 4.7% $4.90 $4.85
75,000-99,999 SF
7.6% 4.9% $4.48 $5.11
100,000-249,999 SF
6.7% 5.3% $3.97 $4.17
250,000-499,999 SF
10.1% 4.9% $3.34 $3.55
500,000 SF +
9.0% 7.8% $3.17 $3.20

Kansas City

Ranked #7 in the U.S. for new supply in 2016

“The Kansas City market continues to become an emerging power as a result of its location, superior infrastructure and business-friendly foreign trade zone program. Kansas City is home to the largest rail center in the United States by tonnage and is located at the middle of the East-to-West corridor and the route from Mexico to Canada. Four interstate systems converge upon Kansas City, resulting in more freeway-lane miles per capita than any other U.S. city, while allowing goods to be delivered to 85% of the nation’s population within two days.” D. Edward Elder, President | Kansas City

Key Strengths:

Kansas City’s central location and multiple intermodal operations allow the growing e-commerce and distribution sector to quickly deliver goods. Amazon invested heavily in the Kansas City market in 2016 with the announcement of three large deals, just two years after initially entering the market.

Logistics Driver:

The Logistics Park Kansas City (LPKC), located adjacent to a BNSF Intermodal Facility, continues to grow and attract tenants at an unprecedented pace for the market. LPKC delivered more than 3.1 million square feet of industrial product in 2016, with more than 2.7 million square feet of that product already accounted for by tenants. 

Vacancy:

The overall vacancy rate in Kansas City climbed to 6.9% in 2016. The vacancy rate continues to rise as a result of the significant amount of speculative development delivered in 2016. Completed project totals continue to outpace absorption figures in the near term, but will likely begin to stabilize in the upcoming quarters. 

Absorption:

At 6.1 million square feet, net absorption in 2016 crushed the previous annual record of 4.4 million square feet in 2007.

Development:

At year-end 2016, construction completions reached an all-time peak of 7.9 million square feet. The future pipeline remains full for development opportunities across all metro submarkets, so expect construction activity to remain elevated throughout 2017. 

Asking Rents:

Asking rates have risen slightly relative to previous quarters and years, but have remained relatively steady as a result of strong development and a temporarily higher amount of vacant space. 

More

Kansas City Key Statistics

  Inventory Overall Vacancy Rate Overall Net Absorption New Supply (Construction) Under Construction Asking Rental Rate (PSF/YR)
2007
226,127,800 6.9% 4,358,677 2,861,699 1,251,938 $4.23
2008
228,046,388 6.8% 2,132,649 1,918,588 121,925 $4.26
2009
229,275,313 7.6% (294,734) 1,228,925 57,328 $4.18
2010
229,382,641 7.8% 410,780 107,328 261,547 $4.19
2011
229,889,282 7.9% 249,628 506,641 789,273 $4.26
2012
230,678,369 6.2% 4,592,152 789,087 2,435,719 $4.28
2013
233,366,719 6.1% 3,238,371 2,688,350 2,109,809 $4.33
2014
237,568,694 6.2% 3,231,359 4,201,975 3,068,567 $4.35
2015
240,587,178 6.1% 3,766,169 3,924,425 6,305,468 $4.38
2016
248,582,720 6.9% 6,131,245 7,995,542 6,547,136 $4.52
 

Key Statistics by Property Size

  Overall Vacancy Rate 2015 Overall Vacancy Rate 2016 Asking Rental Rate 2015 Asking Rental Rate 2016
10,000-24,999 SF
4.6% 3.5% $6.15 $6.68
25,000-49,999 SF
5.3% 4.4% $5.40 $5.49
50,000-74,999 SF
6.4% 4.2% $4.81 $5.05
75,000-99,999 SF
5.9% 7.8% $4.41 $4.32
100,000-249,999 SF
5.7% 6.4% $3.78 $4.12
250,000-499,999 SF
5.6% 10.2% $3.96 $4.10
500,000 SF +
6.0% 7.0% $3.88 $4.05

memphis

At $2.87 PSF/YR in 2016, Memphis has the lowest asking rental rate for a U.S. market over 100 million square feet.

“Memphis is a place where occupiers, developers and investors have the land, the labor and the pro-business environment to be successful. The competitive nature of Tennessee and the neighboring states of Mississippi and Arkansas provide an advantage for occupiers looking to leverage incentives for their distribution/manufacturing locations. Having FedEx and a 1-million-square-foot UPS hub in your backyard doesn’t hurt either. The Class A vacancy rate is the lowest it has ever been and there is more speculative development under construction, proposed or planned than at any point in the past 15 years.” Andy Cates, CEO & President of Brokerage Services | Memphis

Key Strengths:

Memphis is an international distribution hub and global supply chain center with a transportation infrastructure that is second to none. Memphis is served by five Class I railroads, 490 trucking terminals, the nation’s fourth-largest inland water port, 11 highways and the world’s largest cargo airport.

Logistics Driver:

The International Port of Memphis is the second-largest inland port on the shallow draft portion of the Mississippi River and the fifth-largest inland port in the United States. The port is key to feeding product to Memphis’ large rail network. In fact, Memphis is the third-largest rail center in the U.S. behind Chicago and St. Louis. It’s also home to nine fully operational rail yards with a total container capacity of more than 2 million annual lifts. 

Vacancy:

Strong demand lowered the overall vacancy rate in Memphis to 6.7% in 2016—the lowest vacancy rate in that market for more than a decade. 

Absorption:

With more than 13.5 million square feet of net absorption in the past six quarters and only 4.3 million square feet of construction deliveries, the Memphis metropolitan statistical area industrial market is approaching all-time-low vacancy and available property levels.

Development:

With vacant space dwindling, new development has skyrocketed. The 5 million square feet under construction marks the highest level on record for the market.

Asking Rents:

Rental rates continue to ascend, finishing 2016 at $2.87 per square foot per year NNN. Despite this increase, asking rental rates in Memphis remain the most economical in the U.S. for a market over 100 million square feet. 

More

Memphis Key Statistics

  Inventory Overall Vacancy Rate Overall Net Absorption New Supply(Construction) Under Construction Asking Rental Rate(PSF/YR)
2007
207,248,158 11.40% 3,975,031 3,301,624 1,966,686 $2.57
2008
210,719,701 11.50% 3,046,684 2,799,608 852,743 $2.62
2009
210,897,301 12.20% (1,359,980) 157,000 400,000 $2.55
2010
211,329,504 12.10% 627,911 432,203 72,000 $2.45
2011
213,103,873 11.80% 2,018,998 1,260,734 234,600 $2.43
2012
214,996,825 11.80% 1,675,956 1,892,952 1,219,892 $2.53
2013
218,755,938 11.10% 4,879,386 2,842,098 1,376,232 $2.46
2014
221,574,234 11.60% 1,418,504 2,622,032 2,204,040 $2.57
2015
224,125,800 8.40% 9,413,895 2,758,932 1,781,513 $2.70
2016
225,555,325 6.70% 4,993,035 1,886,013 5,042,836 $2.87
 

Key Statistics by Property Size

  Overall Vacancy Rate 2015 Overall Vacancy Rate 2016 Asking Rental Rate 2015 Asking Rental Rate 2016
10,000-24,999 SF
2.80% 2.20% $4.56 $5.59
25,000-49,999 SF
7.50% 6.50% $4.47 $4.63
50,000-74,999 SF
10.10% 10.40% $2.55 $2.57
75,000-99,999 SF
7.40% 7.70% $2.68 $2.89
100,000-249,999 SF
10.70% 8.60% $2.41 $2.53
250,000-499,999 SF
5.50% 6.20% $2.47 $2.30
500,000 SF +
8.20% 5.50% $2.90 $2.94

nashville

At 5.3 million square feet, 2016 was a record-breaking year for product under construction in Nashville.

“The driving factors behind the 2016 boom in Nashville’s industrial sector are the city’s central location and a fast-growing, high-quality labor force ideal for advanced manufacturing and high-end logistics work. Situated in the heart of the Eastern population base and connected by three interstates, Nashville attracts companies like Nissan, Bridgestone, Under Armour, Hankook Tire, Beretta, General Motors and Amazon. The market’s true key driver is access to 24 states within a 650-mile radius, offering cost and time-saving efficiencies for logistics firms with shortened delivery windows.” Janet Miller, Market Leader & CEO | Nashville

Key Strengths:

Home to international brands like Jack Daniel's, FedEx and Gibson Guitar, the Nashville market is a magnet for the big names in the logistics and advanced manufacturing industries. Nashville is a strong secondary market, with a lower cost of doing business than gateway cities like San Francisco, Chicago, New York and Los Angeles. Nearly half of the U.S. population lives within 650 miles of Nashville, which translates to one- and two-day truck delivery times to more than 75% of all U.S. markets. 

Logistics Driver:

While Nashville’s access to Interstate 40, Interstate 65 and Interstate 24 is a major factor in driving demand, the market’s air cargo capabilities at Nashville International Airport put the market at an advantage in the ongoing competition for one-day and same-day delivery. 

Vacancy:

Robust demand continues to lower vacancies in Nashville, finishing 2016 at 4.2%—the market’s lowest vacancy rate in more than a decade.

Absorption:

The 10-year average for industrial absorption in Nashville is 2.7 million square feet. For the past four years, Nashville’s industrial market has surpassed this average despite the delivery of 6.6 million square feet of new product during that time frame.

Development:

Record-breaking rental rates and high occupancy levels continue to drive construction in Nashville. At year-end 2016, 2.5 million square feet had been completed with an additional 5.3 million square feet under construction.  

Asking Rents:

The Nashville industrial market is undergoing the tightest conditions in its history. Demand for industrial space has created a market that is favorable to landlords, allowing owners to push rents to record-high rates while maintaining healthy occupancy levels. 

More

Nashville Key Statistics

  Inventory Overall Vacancy Rate Overall Net Absorption New Supply (Construction) Under Construction Asking Rental Rate (PSF/YR)
2007
175,392,948 6.6% 2,558,225 2,942,985 4,917,222 $3.71
2008
179,370,559 7.2% 2,637,985 3,977,611 3,559,201 $4.16
2009
182,963,518 8.6% 682,884 3,592,959 824,710 $3.87
2010
183,850,440 10.9% (3,417,756) 886,922 2,032,000 $3.47
2011
184,187,741 10.1% 1,752,087 337,301 1,624,000 $3.79
2012
186,779,022 8.7% 4,998,206 2,591,281 117,168 $3.48
2013
188,682,850 8.1% 2,881,594 1,903,828 346,448 $3.54
2014
189,149,338 6.9% 2,671,534 466,488 1,640,041 $3.86
2015
190,789,379 5.3% 4,717,104 1,640,041 1,698,795 $4.28
2016
193,305,674 4.2% 4,357,913 2,516,295 5,309,123 $4.80
 

Key Statistics by Property Size

  Overall Vacancy Rate 2015 Overall Vacancy Rate 2016 Asking Rental Rate 2015 Asking Rental Rate 2016
10,000-24,999 SF
4.2% 1.8% $6.67 $7.31
25,000-49,999 SF
4.3% 1.8% $6.58 $7.67
50,000-74,999 SF
5.9% 2.5% $5.33 $5.74
75,000-99,999 SF
4.2% 1.9% $5.91 $6.04
100,000-249,999 SF
4.6% 3.9% $4.75 $5.01
250,000-499,999 SF
8.0% 6.0% $4.55 $4.89
500,000 SF +
8.8% 6.9% $3.77 $3.76

Shenandoah valley

6.6% overall vacancy rate in 2016 (compared to 12.1% in 2009)

“The Shenandoah Valley market is a cost-effective alternative to markets further north in the Lehigh Valley and central Pennsylvania. The Port of Baltimore and the Port of Virginia provide rail access through CSX and Norfolk Southern, respectively. Combined with access to labor markets in Virginia, Maryland and West Virginia, these factors make the area particularly attractive to employers. This was most recently evidenced by Proctor & Gamble's commitment to a multi-million-square-foot manufacturing and distribution facility in Martinsburg, WV—which will come online in 2018.” John Lesinski, Executive Vice President | Northern Virginia

Key Strengths:

The Shenandoah Valley region offers a plethora of advantages including land available for development and proximity to the metro Washington, D.C., Baltimore and Ohio Valley population bases. The Shenandoah Valley continues to see robust demand, particularly in Frederick, VA; Winchester, VA; and Berkeley, WV.

Logistics Driver:

The Virginia Inland Port is approximately 60 miles west of Washington, D.C. and occupies 161 acres of land. The terminal brings the Port of Virginia 220 miles closer to inland markets and enhances service to the Washington, D.C. and Baltimore metro region by providing rail service to terminals in Hampton Roads. The Virginia Inland Port also consolidates and containerizes local cargo for export. 

Vacancy:

Overall vacancy rates in the Shenandoah Valley finished 2016 at 6.6%—nearly cut in half since the high of 12.1% in 2009.

Absorption:

Overall net absorption in the Shenandoah Valley was positive for the seventh consecutive year, finishing 2016 at 1.6 million square feet. With robust demand and available land, the rate of positive absorption should continue to accelerate.

Development:

Warehouse demand was strong in the second half of 2016 with Home Depot, Millcroft Farms and Fiat-Chrysler leasing or moving into space. Abundant available land in the northern portions of the market will likely lead to new bulk development as vendors for Procter & Gamble and Chrysler seek more space in the region.  

Asking Rents:

With lower levels of vacant space, asking rental rates increased 13.6% in 2016 over the previous year to reach $4.37 per square foot per year NNN. With the area gaining popularity and the pace of development not yet quenching demand, rental rates will likely continue to ascend in the coming year.  

More

Shenandoah Valley Key Statistics

  Inventory Overall Vacancy Rate Overall Net Absorption New Supply(Construction) Under Construction Asking Rental Rate(PSF/YR)
2009
86,489,382 12.1% (924,841) 1,165,641 39,200 $3.80
2010
86,528,582 11.1% 853,842 39,200 - $3.54
2011
86,528,582 10.2% 795,812 - 1,496,284 $3.57
2012
88,024,866 9.9% 1,615,560 1,496,284 553,458 $3.57
2013
88,128,268 9.3% 664,176 103,402 450,056 $3.80
2014
88,648,324 8.5% 1,129,105 520,056 600,000 $3.79
2015
89,631,193 7.5% 1,763,486 1,000,000 877,050 $3.84
2016
90,475,218 6.6% 1,651,744 875,925 1,724,673 $4.37
 

Key Statistics by Property Size

  Overall Vacancy Rate 2015 Overall Vacancy Rate 2016 Asking Rental Rate 2015 Asking Rental Rate 2016
10,000-24,999 SF
8.2% 7.7% $5.10 $5.48
25,000-49,999 SF
8.5% 8.2% $4.53 $5.17
50,000-74,999 SF
6.8% 7.6% $4.15 $4.27
75,000-99,999 SF
6.6% 3.9% $4.63 $4.65
100,000-249,999 SF
12.2% 8.6% $3.40 $3.53
250,000-499,999 SF
8.2% 9.7% $3.82 $3.80
500,000 SF +
3.4% 2.5% $4.17 $4.24

tampa bay

Ranked #10 in the U.S. for overall net absorption in 2016 (up from #28 in 2015)

“Tampa Bay is the demographic center of the state of Florida. The region known as the Interstate 4 corridor is widely diverse, which has positive implications for distributors and manufacturers. They say that if you can sell it or source it in Tampa Bay, you can send it by plane, train or truck anywhere on the planet. As a result, Tampa Bay is increasingly becoming the point of departure or arrival for goods and materials.” Ryan Kratz, President | Tampa Bay

Key Strengths:

An exploding population continues to fuel the Tampa Bay market. E-commerce is one of the key drivers, as Amazon and Walmart have both opened multi-million-square-foot distribution centers.

Logistics Driver:

In 2014, CSX opened the 318-acre Central Florida Intermodal Logistics Center (CFILC) in Winter Haven, FL. The CFILC terminal can process 300,000 containers a year and the surrounding 930 acres can potentially be developed into 7.9 million square feet of distribution and light industrial facilities.

Vacancy:

Overall vacancy rates declined significantly in 2016 to 6.3%—1 percentage point lower than at year-end 2015. Vacancies decreased despite more than 4.4 million square feet of new construction in 2016.

Absorption:

The strong demand in the Tampa Bay market is showcased in net absorption, which finished Q3 2016 at 4.6 million square feet YTD, the 10th-highest level in the country. At the same point in 2015, Tampa Bay ranked 28th for overall net absorption.

Development:

With a large amount of land available for development, the Interstate 4 corridor is expected to see the largest increase in activity in the Tampa Bay market in 2017.  

Asking Rents:

Asking rates were stable in 2016, finishing the year at $5.06 per square foot per year NNN. With vacancies continuing to decline and a large amount of Class A construction completing in 2017, look for asking rental rate growth to accelerate in the coming year.   

More

Tampa Bay Key Statistics

  Inventory Overall Vacancy Rate Overall Net Absorption New Supply(Construction) Under Construction Asking Rental Rate(PSF/YR)
2007
192,937,405 6.3% 2,024,881 4,890,493 4,192,934 $6.77
2008
197,609,411 7.8% 1,417,803 4,672,006 1,424,341 $6.15
2009
199,109,223 11.3% (5,462,129) 1,499,812 40,996 $5.24
2010
199,162,987 11.4% (300,282) 53,764 20,000 $4.68
2011
199,247,397 10.5% 2,005,569 84,410 124,400 $4.52
2012
199,383,957 10.1% 894,914 136,560 245,681 $4.53
2013
199,782,138 9.6% 1,222,775 398,181 1,560,549 $4.72
2014
202,628,060 8.5% 4,860,500 2,845,922 340,000 $4.69
2015
203,593,580 7.3% 3,343,271 965,520 2,199,809 $5.05
2016
207,245,738 6.3% 6,181,076 4,431,676 2,926,025 $5.06
 

Key Statistics by Property Size

  Overall Vacancy Rate 2015 Overall Vacancy Rate 2016 Asking Rental Rate 2015 Asking Rental Rate 2016
10,000-24,999 SF
4.8% 3.1% $6.41 $6.60
25,000-49,999 SF
7.4% 6.4% $5.95 $5.90
50,000-74,999 SF
9.3% 6.2% $4.90 $4.98
75,000-99,999 SF
5.9% 5.7% $4.56 $4.63
100,000-249,999 SF
8.1% 7.2% $4.37 $4.50
250,000-499,999 SF
13.9% 14.4% $4.30 $4.30
500,000 SF +
2.1% 1.5% $4.99 $4.76
For more U.S. research and analysis from Colliers International, visit www.colliers.com/us/insights.