2010 2011 2012 2013 2014 2015 2016 2017 2018 1H 2019
86,815,657 107,934,946 106,975,252 125,709,049 132,567,740 147,511,582 176,713,425 169,308,881 190,769,036 92,999,758
41,521,924 62,129,684 36,507,365 55,557,377 81,105,514 96,231,222 124,963,919 124,278,814 134,357,785 66,078,237
$3.58 $3.57 $3.65 $3.76 $3.89 $4.23 $4.48 $4.58 $4.85 $5.03
7.7% 7.4% 7.1% 6.7% 6.5% 6.3% 5.9% 5.7% 5.7% 5.7%
8,610,043 14,896,284 31,375,859 61,385,179 81,331,353 91,044,177 135,020,155 138,227,092 148,864,681 53,466,918
8,723,202 13,747,187 35,184,002 68,171,313 92,933,985 110,983,762 130,722,178 140,923,903 155,651,469 173,598,809
11.9% 9.0% 8.0% 7.6% 7.2% 7.1% 6.8% 6.8% 7.0% 6.9%
192,757,265 147,711,580 132,567,492 131,928,223 129,692,932 135,702,449 139,391,394 148,777,317 163,323,627 164,546,777
1,615,346,560 1,635,661,988 1,665,354,067 1,733,026,243 1,806,457,017 1,918,652,260 2,043,918,127 2,166,466,308 2,317,743,162 2,383,865,377
3,727 3,753 3,815 3,926 4,078 4,293 4,523 4,779 5,070 5,208
# of Buildings
Existing Inventory
Vacant Inventory
Vacancy Rate
Leasing Activity
Net Absorption
Taking NNN Rent
Cap Rate
Under Construction
Construction Completions
Big-Box Buildings in North America
Historical Data
A new trend, which will gain traction in the coming quarters to attract labor, is to offer more amenities and benefits. Big-box distribution centers throughout the country are starting to look more like creative office space, with break rooms including couches, ping pong tables and basketball courts. Other perks include daycare for children. No matter how creative companies become in attracting and retaining talent, automation can reduce the pressure placed on labor. By introducing automation into distribution centers, companies increase human efficiency by reducing the time it takes to complete any task as well as decrease the need for additional labor to accommodate demand, particularly seasonal demand. Reliance on automation will continue to increase as labor remains scarce and technology continues to advance. Developers will need to be ready as automation requires different building designs and build-outs including space for maintenance, higher clear heights for conveyor systems and more flexible andreliable power sources. Despite these changes, the big-box market seems poised for continued growth. The North American economies remain strong; transportation costs continue to rise at a rate faster than taking rents, and e-commerce continues to grow at a faster rate than traditional in-store retail. These drivers should outweigh the headwinds of global trade and create strong demand and rental rate growth in big-box markets for the foreseeable future.
Although we predict big-box fundamentals to remain solid the second half of the year, there are changes to watch out for. The issue causing the greatest concern is global trade. The movement of goods from sea, air and inland ports to their final destination is a key driver of the U.S. industrial market, but the trade dispute with China could undermine big-box industrial demand, especially in port and manufacturing markets. China, who was once our top trading partner — for both imports and exports — has lowered the amount of American-made goods purchased and has seen a drop in exports to the U.S. Mexico has now taken over as the top trading partner with the U.S. in recent months. Growing labor shortages represents a key challenge ahead for the distribution industry. The U.S. unemployment rate hovers near a 50-year low. With industrial-related hiring already at all-time highs, the insatiable need for labor to service growing e-commerce demands combined with an economy at nearly full employment, is exacerbating the labor shortage for distribution workers in many markets. Thus, occupiers and developers alike will deploy a number of strategies to attract the workers required for supply chain optimization.
While previous years’ activity was dominated by e-commerce retailers including Amazon.com, 2019 looks to be the year of the third-party logistics companies (3PL), with 3PLs signing a majority of the large transactions. The 3PL industry is expanding its e-commerce distribution capabilities faster than any other major industrial occupier, and this looks to continue in the coming quarters and will be a major demand driver going forward. On the investment side, capitalization rates (cap rates) held steady at 5.7% at midyear, with many core markets posting cap rates at or near 5%. While demand for big-box product was solid in core markets, the decreased amount of product to purchase in these markets has pushed investors into secondary markets, where fundamentals are improving and there are more opportunities for higher yields.
The Inland Empire remains the best performing big-box market in North America because of its excellent location, available land for development and strong labor force. The Inland Empire led North America at midyear, with more than 14 million square feet of new leasing and produced more than seven million square feet of net absorption. While the Inland Empire posted solid absorption figures, demand is spread out with nearly all the markets on this report posting positive net absorption. Although demand remains strong, the lack of large big-box space in nearly all of the markets tracked in this report (750,000 square feet and larger) kept fundamentals from surpassing this time last year. At midyear, there were 704 existing distribution buildings larger than 750,000 square feet in the U.S. — 15% are in the Inland Empire and only 42 of these were fully vacant.
Occupiers’ supply chain strategies throughout the United States are going through immense change because of the rapid growth of e-commerce. At the time of this report, e-commerce as a percent of non-automobile retail sales neared 12% and this is expected to grow to 16% by 2021. Occupiers are responding to this continued change in consumer’s purchasing presence by taking more facilities in more locations. This strategy has been the primary factor for the more than 380 million square feet of positive net absorption from 2016-2018 and it looks like 2019 will stay on this course. At midyear, there was 66 million square feet of occupancy gains in the big-box market, putting 2019 activity right at the levels produced the previous three years. Asking rents continue to rise as a large amount of newly constructed facilities hit the market. Asking rents finished midyear at $5.03 per square foot per year NNN, an all-time record.
Overall Net Absorption
12%
14%
10%
8%
6%
4%
2%
0%
9.3%
7.8%
9.2%
7.6%
4.8%
7.0%
6.9%
200,000-499,999 SF
500,000-749,999 SF
750,000+SF
Total
Midyear 2018
Midyear 2019
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
$0.00
$5.01
$5.25
$4.48
$4.56
$4.13
$3.98
$4.66
$5.03
180
160
140
120
100
80
60
40
20
46.7
52.6
36.9
39.4
52.3
78.6
131.8
173.6
70
50
30
10
0
27.3
18.0
22.7
16.1
16.0
61.5
66.1
Big-Box Key Statistics
North America Overview
Southern New Jersey-Eastern Pennsylvania
Northern-Central New Jersey
I-4 Corridor
Toronto
Atlanta
Columbus
Cincinnati
Indianapolis
Chicago
Memphis
Kansas City
Houston
Dallas-Fort Worth
Greater Phoenix
Inland Empire
Northern California
Click each market for more information
CLICK TO VIEW MARKET
84,007,759 SF $5.07 8.7% -477,192 SF
Existing Inventory: Average Rental Rate: Vacancy Rate: Net Absorption:
I-4 CORRIDOR, fl
204,476,661 SF $3.78 11.9% 4,712,503 SF
ATLANTA, GA
100,243,557 SF $6.42 7.6% 2,809,644 SF
NORTHERN CALIFORNIA
325,599,700 SF $6.12 3.9% 7,302,000 SF
INLAND EMPIRE, CA
57,068,665 SF $4.95 14.8% 628,781 SF
GREATER PHOENIX, AZ
43,569,637 SF $4.17 10.4% 816,477 SF
KANSAS CITY, MO
249,116,698 SF $3.80 10.5% 8,859,663 SF
DALLAS-FORT WORTH, TX
86,495,811 SF $5.49 5.9% 4,690,044 SF
HOUSTON, TX
103,896,590 SF $3.50 4.5% 1,593,223 SF
MEMPHIS, TN
261,185,912 SF $4.60 8.6% 6,879,288 SF
CHICAGO, IL
95,668,199 SF $3.62 7.0% 2,168,442 SF
INDIANAPOLIS, IN
67,805,310 SF $4.10 8.1% -1,129,454 SF
CINCINNATI, OH
87,478,340 SF $3.77 4.2% 1,859,971 SF
COLUMBUS, OH
236,425,420 SF $8.43 1.1% 1,975,401 SF
TORONTO, CANADA
113,179,401 SF $7.57 2.7% 4,373,658 SF
NORTHERN-CENTRAL, NJ
267,647,727 SF $5.16 7.1% 3,342,547 SF
SOUTHERN NJ-EASTERN PA
Ceiling heights of 28' clear or greater
Primarily used for distribution
200,000 SF or larger industrial building
Pre-cast or tilt-up concrete construction
What constitutes a big-box building?
In this unique interactive report, we examine the North American big-box industrial market in 2019, which includes the seven core North American big-box markets, as well as nine emerging secondary markets. We will highlight the fundamentals, take a look at demand factors including demographics and logistics capabilities and will assess what lies ahead for 2019 and beyond.
Unless otherwise specified, all report data is for midyear 2019.
Jack Rosenberg, SIOR National Director, Logistics and Transportation Solutions Group jack.rosenberg@colliers.com
Pete Quinn, SIOR National Director, Industrial Services pete.quinn@colliers.com
Contact
A variety of factors across North America have impacted demand for big-box industrial facilities through the first half of 2019. Core markets including the Inland Empire, Dallas-Fort Worth, Atlanta, Chicago, Northern-Central New Jersey, Southern New Jersey-Eastern Pennsylvania and Toronto continue to be the destination of choice for many occupiers, while emerging secondary markets that are near the fastest-growing population centers and in close proximity to the most utilized logistics hubs in the region continue to grow.
Big-Box Market Report
2019 Midyear Review and Outlook
North America
SCROLL DOWN
Big-Box Building Inventory
42
Fully Vacant
703
Big-Box Buildings
> 750,000 SF
51
857
500,000 - 749,999 SF
210
200,000 - 499,999 SF
3,654
Taking NNN rent
$3.52 $3.52 $3.50 $3.59 $3.70 $3.82 $4.17 $4.40 $4.49 $4.79
8.1% 7.8% 7.5% 6.9% 6.6% 6.4% 6.4% 5.9% 5.7% 5.7%
10,228,419 8,715,426 12,761,442 33,625,820 67,320,033 91,330,973 107,293,335 129,410,652 141,688,120 151,141,235
36,045,140 8,898,043 12,587,508 19,754,682 50,892,894 84,810,509 109,156,627 133,312,474 138,213,131 152,174,717
Vancancy Rate
13.9% 11.9% 9.1% 8.2% 7.8% 7.4% 7.1% 6.9% 6.9% 7.0%
81,359,911 91,291,308 112,780,658 115,520,784 132,437,852 140,723,299 159,831,516 187,006,993 176,328,101 193,432,216
11,629,433 42,444,497 62,239,897 32,263,242 55,806,652 84,171,975 99,630,567 124,705,797 125,700,178 138,481,665
Number of Buildings
3,705 3,726 3,754 3,814 3,927 4,080 4,294 4,568 4,828 4,876
1,603,959,208 1,613,786,125 1,631,015,470 1,662,009,922 1,726,449,885 1,808,043,200 1,917,042,163 2,046,717,358 2,183,752,822 2,334,888,583
223,743,254 192,265,547 148,931,588 136,272,499 135,499,084 133,076,343 136,864,972 141,796,586 150,684,307 163,986,126
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Historical data
Notable Transactions
225 Midland Ct. McDonough, GA Investment $60.17 PSF
TA Realty 698,068 SF
650 Braselton Pkwy. Braselton, GA Investment $163.51 PSF
Monmouth Real Estate 373,750 SF
705 Braselton Industrial Blvd. Braselton, GA User $69.96 PSF
Uline 1,000,821 SF
405 King Mill Rd. McDonough, GA Investment $67.64 PSF
CBRE Global Investors 2,307,790 SF
Big-Box Sales - 2018
5390 Hunter Rd. Atlanta, GA Renewal
Kellogg's 903,145 SF
500 Palmetto Logistics Pkwy. Fairburn, GA New-Direct
Medical Depot 1,054,500 SF
Commerce 85 Logistics Park Commerce, GA Build-To-Suit
Haier/GE Appliances 1,099,880 SF
590 Coweta Industrial Park Newnan, GA New-Direct
Saddle Creek Logistics 1,208,301 SF
Big-Box Leases - 2018
The demand for labor has been magnified by e-commerce distribution's heavy employee counts and significant seasonal spikes in demand. Big-box e-commerce occupiers can require two to three times the amount of labor as a traditional distribution user needs. With labor demand increasing, more companies will require more advanced site selection processes to grind down the exact submarkets where available labor can be found, and this process in site selection will gain importance over a submarket's logistics advantages and building functionality. Despite these headwinds, the big-box market seems poised for continued growth. The North American economies remain strong; transportation costs continue to rise at a rate faster than taking rents; e-commerce continues to grow at a faster rate than traditional in-store retail; and logistics drivers from the air, ground, sea and rail continue to post gains. These drivers should outweigh the headwinds and create strong demand and rental rate growth in big-box markets for the foreseeable future.
Although we predict fundamentals to remain robust in 2019, there are headwinds to look out for. The issue causing the greatest concern is global trade. Growing trade tensions with some of our leading trading partners could undermine big-box demand, especially in port markets. China is of particular concern, as it is not only our top trading partner—including both imports and exports— but has the greatest trade imbalance with the U.S. While recent communications from Washington point to a willingness to negotiate a trade deal with China, industrial real estate demand could take a hit in the coming year if no deal is reached and tariffs are increased to 25%. Also, the election of a Democratic majority in the House of Representatives has made prospects for passage of the new North American Free Trade Agreement (NAFTA) deal less certain, potentially disrupting trade with Mexico and Canada and potentially negatively affecting industrial real estate markets along major trade routes between the three countries.
While 2017 activity was dominated by e-commerce retailers including Amazon.com, 2018 looks to be the year of the third-party logistics companies (3PL), with 3PLs signing a majority of the large transactions in 2018. The 3PL industry is expanding its e-commerce distribution capabilities faster than any other major industrial occupier, and this looks to continue in the coming quarters and will be a major demand driver in 2019. On the investment side, capitalization rates (cap rates) held steady at 5.7% in 2018, with many core markets posting cap rates at or near 5%. While demand for big-box product was solid in core markets, the decreased amount of product to purchase in these markets has pushed investors into secondary markets, where fundamentals are improving and there are more opportunities for higher yields.
The Inland Empire remains the best performing big-box market in North America because of its excellent location, available land for development and strong labor force. The Inland Empire led North America in 2018 with more than 27 million square feet of new leasing, and produced a record 20.8 million square feet of net absorption. While the Inland Empire posted superior absorption figures compared with last year, many other markets posted year-over-year absorption increases. Although demand remains strong, the lack of large big-box space in nearly all of the markets tracked in this report (750,000 square feet and more) kept fundamentals from rising much farther. At year-end, there were 694 existing distribution buildings larger than 750,000 square feet in the U.S. (17% are in the Inland Empire) and only 39 of these were fully vacant.
Occupiers' supply chain strategies throughout the United States are going through immense change because of the rapid growth of e-commerce. In 2018, much attention was given to the final-mile and the challenges and opportunities that arose from this demand, especially in urban areas. While final-mile real estate got the majority of the press, the backbone of distribution throughout North America remained regional big-box distribution centers. The North American big-box market continues to ride a wave of robust demand brought on by a solid U.S. economy and, of course, the rapid rise of e-commerce. This demand is fueling record leasing activity, net absorption and development for big-box product throughout North America. The Inland Empire remains the best performing big-box market in North America because of its excellent location, available land for development and strong labor force. The Inland Empire led North America in 2018 with more than 27 million square feet of new leasing, and produced a record 20.8 million square feet of net absorption. While the Inland Empire posted superior absorption figures compared with last year, many other markets posted year-over-year absorption increases. Although demand remains strong, the lack of large big-box space in nearly all of the markets tracked in this report (750,000 square feet and more) kept fundamentals from rising much farther. At year-end, there were 694 existing distribution buildings larger than 750,000 square feet in the U.S. (17% are in the Inland Empire) and only 39 of these were fully vacant. While 2017 activity was dominated by e-commerce retailers including Amazon.com, 2018 looks to be the year of the third-party logistics companies (3PL), with 3PLs signing a majority of the large transactions in 2018. The 3PL industry is expanding its e-commerce distribution capabilities faster than any other major industrial occupier, and this looks to continue in the coming quarters and will be a major demand driver in 2019. On the investment side, capitalization rates (cap rates) held steady at 5.7% in 2018, with many core markets posting cap rates at or near 5%. While demand for big-box product was solid in core markets, the decreased amount of product to purchase in these markets has pushed investors into secondary markets, where fundamentals are improving and there are more opportunities for higher yields. Although we predict fundamentals to remain robust in 2019, there are headwinds to look out for. The issue causing the greatest concern is global trade. Growing trade tensions with some of our leading trading partners could undermine big-box demand, especially in port markets. China is of particular concern, as it is not only our top trading partner—including both imports and exports— but has the greatest trade imbalance with the U.S. While recent communications from Washington point to a willingness to negotiate a trade deal with China, industrial real estate demand could take a hit in the coming year if no deal is reached and tariffs are increased to 25%. Also, the election of a Democratic majority in the House of Representatives has made prospects for passage of the new North American Free Trade Agreement (NAFTA) deal less certain, potentially disrupting trade with Mexico and Canada and potentially negatively affecting industrial real estate markets along major trade routes between the three countries. The demand for labor has been magnified by e-commerce distribution's heavy employee counts and significant seasonal spikes in demand. Big-box e-commerce occupiers can require two to three times the amount of labor as a traditional distribution user needs. With labor demand increasing, more companies will require more advanced site selection processes to grind down the exact submarkets where available labor can be found, and this process in site selection will gain importance over a submarket's logistics advantages and building functionality. Despite these headwinds, the big-box market seems poised for continued growth. The North American economies remain strong; transportation costs continue to rise at a rate faster than taking rents; e-commerce continues to grow at a faster rate than traditional in-store retail; and logistics drivers from the air, ground, sea and rail continue to post gains. These drivers should outweigh the headwinds and create strong demand and rental rate growth in big-box markets for the foreseeable future.
7.5%
8.6%
9.9%
7.2%
3.4%
TOTAL
2018
2017
$4.96
$4.50
$4.53
$4.33
$4.02
$3.27
$4.79
$4.49
48.3
47.2
41.9
33.6
60.9
151.1
141.7
56.4
42.5
34.6
32.1
47.4
51.1
138.5
125.7
38
694
750,000+ SF
836
3,576
Ceilings heights of 28' clear or greater
Jack Rosenberg, SIOR National Director, Logistics and Transportation jack.rosenberg@colliers.com
James Breeze National Director of Industrial Research james.breeze@colliers.com
Unless otherwise specified, all report data is for year-end 2018.
A variety of factors across North America created record demand for big-box industrial facilities across the country in 2018. Core markets including the Inland Empire, Atlanta, Dallas-Fort Worth, Chicago, Northern-Central New Jersey, Southern New Jersey-Eastern Pennsylvania and Toronto all posted robust fundamentals, while emerging secondary markets that are near the fastest-growing population centers and in close proximity to the most utilized logistics hubs in the region continued to grow. In this unique interactive report, we examine the record strength of the North American big-box industrial market in 2018, which includes the seven core North American big-box markets, as well as nine emerging secondary markets. We will highlight the fundamentals, take a look at demand factors including demographics and logistics capabilities and will assess what lies ahead for 2019 and beyond.
2018 Year-End Review and Outlook
North American
ALL MARKETS
Atlanta Chicago Cincinnati Columbus Dallas-Fort Worth Greater Phoenix Houston I-4 Corridor Indianapolis Inland Empire Kansas City Memphis Northern California Northern-Central NJ Southern New Jersey-Eastern Pennsylvania Toronto
285 288 291 296 303 318 351 375 403 415
126,475,256 128,516,485 130,138,205 133,180,644 137,230,212 147,256,237 165,184,980 179,222,035 196,281,436 204,476,661
22,570,280 17,172,402 16,472,904 16,796,717 10,582,893 11,129,328 17,960,261 18,976,375 20,746,039 24,237,933
18.0% 14.4% 14.1% 13.3% 8.2% 8.2% 11.4% 10.9% 10.6% 11.9%
9,157,777 10,562,753 16,133,953 18,734,594 22,098,191 13,397,571 21,822,663 24,997,747 21,777,114 9,787,586
1,652,269 6,351,441 1,709,148 3,782,829 10,494,471 9,175,612 11,168,850 13,276,140 15,903,758 4,712,503
$2.71 $2.77 $2.73 $2.84 $2.99 $3.21 $3.43 $3.52 $3.67 $3.78
8.5% 7.8% 7.6% 6.9% 6.8% 5.9% 6.1% 6.0% 5.5% 5.0%
2,886,767 2,041,229 1,621,720 3,042,439 4,049,568 10,026,025 17,928,743 14,037,055 17,059,401 8,195,225
2,041,229 1,336,120 3,042,439 2,195,278 9,890,390 14,120,655 14,811,216 17,875,128 16,668,810 16,935,383
Big-Box Buildings in Atlanta (200K+ SF & 28' Clear)
8
77
5
67
23
271
One of Atlanta’s many logistics advantages is its close proximity to the Port of Savannah, the fourth-largest seaport in North America and the second-largest on the East Coast. The Port of Savannah is home to the Garden City Terminal—the largest single terminal in the U.S., which operates two Class I rail yards. Some of the largest industrial markets in the U.S., including Atlanta, are within just a four-hour drive from the Port of Savannah. In 2018, the region became home to the Appalachian Regional Port. The new inland port located in nearby Chatsworth, GA offers direct rail service from the Port of Savannah’s Garden City Terminal, significantly lowering truck traffic through the Atlanta area.
Major Logistics Driver
Senior Vice President Atlanta
Ben Logue, SIOR
“Atlanta is the economic driver of the fastest growing geographic region in the United States. Recognized as the nation’s fourth-fastest gentrifying city, Atlanta remains in the top five for fastest growing metropolitan areas in the country. For 20 consecutive years, Atlanta’s Hartsfield-Jackson is the world’s busiest passenger airport; moving more than 100 million passengers annually. Atlanta ranks third with the largest concentration of Fortune 500 companies in the United States. The Atlanta industrial market has added more than 100 million square feet in net absorption in the last five years, with nearly 60% of this growth coming from new, big-box occupancies. The Port of Savannah has the highest TEU volume growth year over year at 11.7% and the $700 million Savannah Harbor Expansion Project will deepen the channel to 47 feet for the post-Panamax shipping. Economic diversity, abundant employment opportunities, and unsurpassed transportation and technology infrastructure will continue to fuel Atlanta’s Tier 1 industrial market growth in 2019 and beyond.”
Back
Georgia
Despite a slew of larger deals (900,000+ square feet), Atlanta’s big-box market activity declined in the first half of 2019. Even so, overall fundamentals were solid with positive net absorption, higher taking rents, lower cap rates, and a large amount of new development taking shape. Developers remain bullish on the market because of the plethora of logistics advantages and, most importantly, a large and growing labor base. At midyear, 9.8 million square feet of new leases signed, much lower than the 12.5 million square feet leased at the same time a year ago. Overall net absorption also declined, dropping to 4.7 million square feet, 16% lower than the previous year. On the heels of solid demand in 2018, more than 8.1 million square feet of construction completed in the first half of 2019 and this pace of development will not stop any time soon as a record 16.9 million square feet was under construction at midyear.
Because of a plethora of new development, the overall vacancy rate increased 50 basis points compared with the previous year to 11.9%, the highest vacancy rate since year-end 2013. Despite a rise in vacant product on the market, taking rents continue to ascend, finishing midyear at a record high $3.78 per square foot per year NNN. Investor demand remains strong with many large-scale transactions closing. Because of robust activity, cap rates dropped to a record low 5% at midyear. Atlanta has the necessary factors for continued robust fundamentals and a pickup in activity in the coming quarters. Its central location in the Southeast U.S. provides access to 28 million people within 250 miles. Along with growing inland logistics capabilities, these factors will be a boon for the market. In the coming quarters, it is expected that net absorption will remain positive, cap rates will remain low and taking rents will rise above their current record high.
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at midyear is an all-time record
5% cap rate
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Big-Box Buildings in Atlanta
$2.85 $2.76 $2.80 $2.78 $2.89 $3.01 $3.25 $3.41 $3.51 $3.62
8.4% 8.5% 7.8% 7.6% 6.9% 6.8% 5.9% 6.1% 6.0% 5.5%
4,036,767 2,041,229 1,336,120 3,042,439 2,195,278 9,890,390 14,120,655 15,404,016 18,324,688 17,658,062
1,216,162 2,886,767 2,041,229 1,621,720 3,042,439 4,049,568 10,026,025 17,897,098 14,629,855 17,508,961
17.8% 18.3% 14.7% 14.5% 13.6% 8.2% 8.2% 11.3% 11.2% 10.7%
10,354,169 9,309,760 10,608,833 16,153,972 18,756,261 22,375,091 13,397,571 22,403,937 24,955,747 25,651,112
664,656 1,774,800 6,315,094 1,683,087 3,782,829 11,101,551 9,175,612 11,207,609 13,292,971 16,481,672
288 291 294 297 302 309 324 357 382 411
125,668,539 128,555,306 130,596,535 132,218,255 135,260,694 139,310,262 149,336,287 167,233,385 181,863,240 199,372,201
22,418,851 23,530,818 19,256,953 19,195,586 18,455,196 11,403,213 12,253,626 18,943,115 20,279,999 21,307,288
6
71
66
25
274
The Atlanta big-box market continued to thrive in 2018 with robust leasing activity, new development and record high rental rates. Tenants moved into the market in droves because of the plethora of logistics advantages and, most importantly, a large and growing labor base. In 2018, a record 25.7 million square feet of big-box space leased, the second most in North America. Overall net absorption also reached record heights, finishing at 16.5 million square feet, also good enough for second place. With demand reaching all-time highs, new development projects hit the market at a record pace, with 17.5 million square feet of new development. Despite record new development, the overall vacancy rate decreased in 2018 to 10.7%, the lowest since 2015. Even though the vacancy rate is in double digits, developers are bullish on the Atlanta market, with 17.7 million square feet under construction—tied for first with the Inland Empire. Investor demand remains strong with many large-scale transactions closing. Because of robust activity, cap rates dropped below the North American average for big-box space, finishing 2018 at 5.5% Atlanta has the necessary factors for continued robust fundamentals. Its central location in the Southeast U.S. provides access to 28 million people within 250 miles. Along with growing inland logistics capabilities, these factors will be a boon for the market. In the coming quarters, it is expected that net absorption will remain positive and on par with 2018, vacancy rates will decline, cap rates will remain low and taking rents will rise above its current record high.
“Atlanta is the transportation and logistics hub of the fastest growing geographic region in the country. Most major companies are locating or expanding in Atlanta, due to its growing population (especially in the millennial segment), and relatively low cost of living. Atlanta is home to the world’s busiest passenger airport and near one of the fastest growing seaports (Savannah) in the country. Because of this, Atlanta is on pace for another year of robust big-box growth in 2019.”
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PVH Corp. 982,777 SF 8500 Tatum Rd. Palmetto, GA Direct Lease
Stitch Fix 925,800 SF 801 Factory Shoals Rd. Lithia Springs, GA Direct Lease
Fr8 Auctions 527,000 SF 1265 Terminus Dr. Lithia Springs, GA Direct Lease
Atlanta Bonded Warehouse 499,320 SF 1050 Preston Blvd. Lithia Springs, GA Direct Lease
GLL Real Estate Partners 1,208,301 SF 590 Coweta Industrial Park Newnan, GA Investment $79,350,000 $65.67 PSF
TA Realty 848,421 SF 2160 Anvil Block Rd. Ellenwood, GA Investment $57,000,000 $67.18 PSF
MCB Real Estate 1,000,200 SF 1015 Collinsworth Rd. Palmetto, GA Investment $50,750,000 $50.74 PSF
Lexington Realty Trust 604,852 SF 7875 White Rd. Austell, GA Investment $45,300,000 $74.90 PSF
Big-Box Sales - 2019
406 407 410 418 437 477 518 554 578 593
174,896,238 176,246,238 177,111,981 183,433,259 191,107,885 207,187,079 224,730,700 244,687,531 254,916,764 261,185,912
24,310,577 17,977,116 15,762,966 15,591,827 13,759,768 14,710,283 16,180,610 23,561,292 23,132,105 22,521,965
13.9% 10.2% 8.9% 8.5% 7.2% 7.1% 7.2% 9.6% 9.1% 8.6%
9,876,554 11,496,182 13,372,315 15,967,560 12,902,662 16,248,184 14,390,831 11,266,980 16,447,765 8,937,414
4,022,613 7,683,461 3,079,893 6,492,417 9,506,685 15,128,679 16,073,293 12,576,149 10,867,349 6,879,288
$3.47 $3.61 $3.98 $4.10 $4.43 $4.46 $4.49 $4.53 $4.58 $4.60
6.5% 7.0% 7.0% 6.5% 5.8% 5.3% 5.0% 5.0% 5.1% 5.2%
– 1,350,000 865,743 6,321,278 7,674,626 16,079,194 17,543,621 19,956,831 10,235,066 6,269,148
1,350,000 627,100 4,026,851 4,307,145 8,801,182 11,037,540 19,208,730 7,054,698 15,650,290 13,790,226
Big-Box Buildings in Chicago (200K+ SF & 28' Clear)
69
93
27
431
Chicago is the major rail center of the United States. Six of the seven major rail lines have hubs in the greater Chicago area, a major reason the region is one of the largest big-box industrial markets in the country. The region claims 70% of the nation’s rail and intermodal activity. Rail is not the only logistics advantage that the region provides. Three of the nation’s busiest transcontinental expressways cross through the region. The Chicago Air Gateway comprises O’Hare International Airport and the Midway Airport. Consistently recognized as one of the busiest airports in the world, Chicago O'Hare International Airport is not only a national aviation hub, it is also a global air cargo gateway, providing billions of dollars in trade to Chicago's economy. Chicago O’Hare is the fourth-busiest cargo airport in the U.S. and its cargo capabilities will continue to be an advantage for occupiers in the region.
National Director, Logistics and Transportation Group Principal, Chicago
Jack Rosenberg, SIOR
“Demand for modern big-box facilities in Chicago’s industrial real estate market has been consistently strong for years and looks to get even stronger through the end of 2019, with multiple requirements for large spaces with industry-leading features including higher clear heights, ample trailer parking, and increased car parking ratios. Developers have picked up on this demand and are building modern, flexible buildings to meet it.”
Illinois
With its multitude of logistics advantages, and more than 37 million people residing within 250 miles, Chicago remains one of the most in-demand big-box markets in North America. Because of this demand, fundamentals were robust in the first half of 2019, with strong leasing activity, lower vacancies, significant investor activity and increased taking rents. New leasing activity was robust once again at midyear, with 8.9 million square feet of new transactions signed, much higher than the 7.9 million square feet signed at the same time a year ago. Continued strong activity kept net absorption positive at nearly seven million square feet, which is on par with the same time last year. Strong activity raised first year taking rents to $4.60 per square foot per year NNN, a $0.30 per square foot per year increase compared with the same time a year ago. Increased rents kept investor interest strong and sale prices high, keeping cap rates low at 5.2%.
Overall vacancy rates declined in the region to 8.6%, the lowest vacancy rate for big-box product since 2016. The vacancy rate decreased despite an increase in new development, with 6.9 million square feet completing during the first half of 2019. Developers remain bullish on Chicago, with 13.8 million square feet currently under construction. With demand expected to keep its current pace, and new supply from development expected to increase, vacancy rates will remain stable and taking rents will continue its upward trajectory in the coming year. Look for e-commerce, retail and wholesale occupier demand to stay robust, but the biggest increases in occupier demand will come from the third-party logistics industry as many of its occupiers look to shore up their footprint in core markets across the country to increase their ability to service their clients’ e-commerce requirements.
major rail lines have hubs in Chicago
Six of the seven
NEXT: CINCINNATI
PREVIOUS: ATLANTA
Fresenius Kabi USA, LLC 590,525 SF Stateline 94 Corporate Park Pleasant Prairie, WI Build-to-suit lease
Big-Box Leases - 2019
Wholesale Interiors 549,588 SF 2805 Duke Pkwy. Aurora, IL Sublease
Silgan Containers LLC 524,339 SF 2602 128th Ave. Kenosha, WI Direct Lease
FedEx Corporation 469,920 SF 145 S Pinnacle Dr. Romeoville, IL Direct Lease
Colony Capital, Inc. 1,334,012 SF 4 Chicago-area big-box buildings Various cities Part of a 58-property national investment portfolio sale TBD
The Blackstone Group LP 886,213 SF 2580 Prospect Ct. & 1789 Hubbard Ave. Aurora, Batavia, IL Part of a 54-property national investment portfolio sale TBD
Prologis 866,808 SF 3 big-box buildings Bolingbrook, IL 3-property local investment portfolio sale $66,150,000 $76.31 PSF
Brennan Investment Group 679,600 SF 2101 Dalle Rd. University Park, IL Sale-leaseback $23,000,000 $33.84 PSF
Prologis 866,808 SF 3 big box buildings Bolingbrook, IL 3-property local investment portfolio sale $66,150,000 $76.31 PSF
Colony Capital, Inc. 1,334,012 SF 4 Chicago-area big box buildings Various cities Part of a 58-property national investment portfolio sale TBD
Wholesale Interiors 549,588 SF 2805 Duke Pkwy Aurora, IL Sublease
125 126 128 131 133 137 143 148 157 161
48,106,385 48,909,185 49,111,185 50,169,056 51,394,043 53,623,657 57,289,504 59,363,184 66,072,237 67,805,310
5,641,802 6,368,636 5,509,099 4,143,516 2,662,329 3,179,593 4,191,432 3,335,511 2,640,734 5,503,261
11.7% 13.0% 11.2% 8.3% 5.2% 5.9% 7.3% 5.6% 4.0% 8.1%
– 3,013,872 2,279,043 5,358,153 3,007,563 1,956,168 3,444,246 5,470,578 5,759,419 1,849,787
1,045,520 –726,834 1,061,537 2,423,454 3,144,497 1,809,123 2,654,038 2,910,501 5,248,250 –1,129,454
$2.93 $2.88 $2.77 $3.05 $2.81 $3.36 $3.67 $3.88 $4.00 $4.10
9.0% 8.1% 8.0% 7.2% 7.2% 6.9% 7.0% 6.1% 6.0% 6.0%
– 802,800 1,072,046 1,150,000 1,808,164 2,931,375 3,665,877 2,073,680 4,728,915 2,396,745
366,096 930,588 1,227,046 1,789,500 2,156,220 2,110,587 2,214,973 3,663,328 7,128,374 9,791,454
Big-Box Buildings in Cincinnati (200K+ SF & 28' Clear)
1
13
34
4
114
Cincinnati’s central location makes it an ideal location from a logistics standpoint. Cincinnati is becoming an e-commerce destination due to its large workforce, excellent transportation advantages and a population of more than 35 million people within 250 miles. Cincinnati’s two main airports make the region one of the prime air freight markets in the country. The Cincinnati/Northern Kentucky International Airport is one of the largest air cargo ports in the country, finishing in the top 10 in 2018. The market has the advantage of also being near the Louisville International Airport, ranked the third largest cargo airport in the U.S., which is home to UPS’ international air hub. While Cincinnati was not chosen as the location for Amazon.com’s HQ2, it is home to the new Amazon Prime Air hub.
Senior Vice President & Principal Cincinnati
John B. Gardner, III, SIOR
“The Cincinnati industrial market completed 2018 with record levels of new construction and market activity, creating one of the highest net absorption years at 6.6 million square feet. 2019 is providing even a higher level of new construction at just over 10 million square feet, but tenant demand has drastically softened. This lack of activity has caused a great amount of uncertainty as we finish the second half of the year.”
Ohio
The Cincinnati big-box market is particularly well-suited to meet the growing demand for faster delivery and the accompanying demand for warehousing and transportation. Despite the plethora of logistics advantages, big-box activity declined significantly in the first half of 2019. Only 1.8 million square feet of new leases signed in the first half of 2019. The lack of new activity, combined with an increased number of move outs, created 1.1 million square feet of negative absorption at midyear, one of only two big-box markets tracked in this report that posted negative absorption. The lack of activity combined with a solid amount of new construction also increased the vacancy rate to 8.1%, significantly higher than the 4.1% vacancy rate this time last year. Despite a significant increase in the vacancy rates, there remains a lack of full vacant buildings in the market. At the time of this report there were only five fully-vacant buildings in Cincinnati, with only one of these larger than 500,000 square feet. This lack of fully-vacant product, especially large footprints, is a major factor for the decrease in activity.
Despite a lack of activity and increased amount of vacant product on the market, taking rents were on par with the same time a year ago, at $4.10 per square foot per year NNN, only $0.02 per square foot per year lower than midyear 2018. Despite a lack of activity, investor interest in the market remains with Exeter and Blackcreek expanding its holdings in the region. Cap rates are stable in Cincinnati at 6%, still higher than the national average. All signs point to a reversal of fortune in the Cincinnati big-box market in the coming quarters. Tenants in the market, while not at last year’s peak, are still solid and the market’s logistics advantages and pro-business policies will drive more occupiers to move into the region. This will increase activity, lower vacancy rates, and keep taking rents on the same trajectory in the coming quarters.
per year first year taking rent is the highest on record
$4.10 per square foot
NEXT: COLUMBUS
PREVIOUS: CHICAGO
Vertiv 483,000 SF 3500 Langly Dr. Hebron, KY Renewal
Fit for Life 208,120 SF 9107 Meridian Way West Chester, OH Direct Lease
TSC Apparel 195,866 SF 8586 Trade Center Dr. West Chester, OH Direct Lease
Thysenkrupp Bilstein 143,743 SF 3033 Symmes Rd. West Chester, OH Direct Lease
Modula Inc 252,000 SF 5000 Commerce Center Dr. Franklin, OH Owner User $13,161,960 $52.23 PSF
Exeter Property Group 245,000 SF 4700 Muhlhauser Rd. Hamilton, OH Investment $15,974,000 $65.20 PSF
Black Creek Diversified Property Fund 218,400 SF 9899 Sam Neace Dr. Florence, KY Investment $18,550,896 $84.94 PSF
Investcorp International Inc. 195,280 SF 4255 Thunderbird Ln. Fairfield, OH Investment $10,769,692 $55.15 PSF
131 131 131 133 138 142 149 153 161 167
68,334,484 68,334,484 68,334,484 69,406,367 71,826,948 74,053,660 78,756,805 80,146,300 84,839,513 87,478,340
9,048,373 10,172,679 8,277,577 6,596,766 5,398,180 8,572,251 7,313,695 5,751,928 6,382,079 3,683,655
12.9% 14.7% 12.0% 9.3% 7.4% 11.1% 9.0% 8.0% 7.5% 4.2%
4,720,497 5,480,145 5,216,773 6,214,907 6,294,946 9,518,280 4,413,865 6,454,459 9,275,480 3,202,117
2,133,886 –1,233,165 1,895,102 2,757,896 3,619,167 –708,685 5,831,622 2,946,472 3,676,077 1,859,971
$2.88 $2.65 $2.43 $2.32 $2.86 $3.08 $3.08 $3.34 $3.57 $3.77
7.8% 7.9% 7.6% 7.4% 7.1% 6.9% 7.0% 7.1% 7.1% 7.0%
– – – 1,071,883 2,420,581 2,226,712 4,703,145 1,389,495 4,759,380 1,183,094
– – 478,053 1,221,653 1,369,912 4,703,145 831,350 4,995,525 465,478 3,248,025
Big-Box Buildings in Columbus (200K+ SF & 28' Clear)
31
26
116
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 driven by the expansion of the Panama Canal. The majority of rail freight traveling to Columbus is international and reaches the Ohio Valley via East Coast and West Coast ocean ports. The Port is serviced by Norfolk Southern and CSX. The Norfolk Southern Rickenbacker Intermodal Terminal, which covers 175 acres and can handle more than 400,000 containers annually, is located in the heart of the facility. The land development within the Port has the capacity to grow to 70 million square feet of industrial space.
Executive Vice President & Principal Columbus
Michael Linder, SIOR
“Throughout the rest of the year, the Columbus market will continue to see growth and high demand in industrial space. Columbus has a strategic location, being within a 10-hour drive of half of the U.S. population. The city is seeing ongoing demand from 3PL providers, manufacturers and e-commerce companies, primarily in the Southeast and West submarkets. Additionally, Rickenbacker Inland Port is a point of access for cargo via air and rail, making Columbus ideally positioned for increased international cargo demand in the future.”
Columbus is a growing big-box market because of its plethora of logistics advantages and its location near a large young population. Occupiers continued to lease space at a solid pace the first half of 2019 with more than 3.2 million square feet of new leasing activity. New leasing activity kept occupancy gains strong at 1.9 million square feet, just slightly lower than the 2.3 million square feet absorbed the first half of 2018. Positive absorption will continue into the second half of 2019, as many of the large transactions signed in the first half will occupy — a good sign that 2019 will finish with the 10th consecutive year of positive absorption for big-box space. Continued positive absorption drove up first year taking rents to an all-time high of $3.77 per square foot per year NNN, 13% higher than the previous year. Columbus is ripe for increased investor demand because of higher taking rents and a cap rate of 7%, much higher than nearby core markets.
Developers were bullish about the Columbus industrial market in 2018, with 4.8 million square feet of new development, however new development has slowed in the first half of 2019 with only 1.2 million square feet completed. Despite a slow start for development, a respectable 3.2 million square feet is currently under construction. Factors driving development include a booming inland port and a growing population base of nearly 36 million people within 250 miles of Columbus. These factors are also increasing e-commerce and retail demand in the region, with Amazon.com and Walmart taking large facilities in the region. In the coming quarters, look for leasing activity to stay strong, keeping net absorption positive, and taking rents to continue their rise for the foreseeable future. With new development increasing the second half of 2019, vacancies will stabilize, but new development is warranted and needed — at the time of this report there were only two vacant building in Columbus larger than 500,000 square feet.
is the lowest in over a decade
4.2% vacancy rate
NEXT: DALLAS-FORT WORTH
PREVIOUS: CINCINNATI
Walmart 758,465 SF 6198 Green Pointe Dr. Groveport, OH Direct Lease
Amazon 514,491 SF 3538 Tradeport Ct. Columbus, OH Direct Lease
ODW 223,963 SF 657 Tradeport Ct. Columbus, OH Direct Lease
Jeld-Wen 155,990 SF 87 Heritage Dr. Pataskala, OH Expansion
Mapletree 1,020,205 SF 3780 Tradeport Ct. Lockbourne, OH Investment $60,490,031 $59.29 PSF
Granite REIT 802,390 SF 1901 Beggrow St. Lockbourne, OH Investment $53,200,000 $66.30 PSF
Dream Industrial REIT 240,206 SF 4311 Janitrol Rd. Columbus, OH Investment $14,841,608 $61.79 PSF
Amnon & Dalia Hadari 229,333 SF 2850 Rohr Rd. Groveport, OH Investment $14,200,000 $61.92 PSF
2
343 345 346 358 382 415 452 497 538 552
145,079,950 146,404,950 147,356,430 153,837,492 167,961,995 183,038,963 198,712,887 221,239,674 240,778,992 249,116,698
26,718,863 20,076,380 15,199,568 12,279,273 18,446,053 19,216,454 17,855,847 21,560,688 26,639,553 26,117,596
18.4% 13.7% 10.3% 8.0% 11.0% 10.5% 9.0% 9.7% 11.1% 10.5%
11,295,086 18,796,352 17,117,770 24,358,763 22,270,784 27,778,017 26,173,665 25,644,567 22,358,742 10,440,964
2,671,806 7,967,483 5,828,292 9,401,357 7,957,723 14,306,567 17,034,531 18,821,946 14,460,453 8,859,663
$3.21 $3.18 $3.22 $3.26 $3.51 $3.66 $3.72 $3.79 $3.82 $3.80
8.0% 8.0% 7.4% 6.3% 6.8% 7.0% 6.0% 6.8% 6.6% 6.6%
400,123 1,325,000 951,480 6,481,062 14,124,503 15,076,968 15,673,924 22,526,787 19,539,318 8,337,706
1,020,000 951,480 3,265,722 12,361,705 12,860,719 15,289,964 19,897,931 17,563,383 19,424,407 23,598,948
Big-Box Buildings in Dallas-Fort Worth (200K+ SF & 28' Clear)
99
54
386
Dallas-Fort Worth’s central U.S. location enables the market to act as an advantageous distribution hub, with quick access to rail, air and truck transportation. The region is a global inland port with two locations capable of large-scale cargo operations: Alliance Global Logistics Hub and Southern Dallas County Inland Port. Home to major rail logistics operations for the two primary western U.S. railroads — BNSF Railway and Union Pacific Railroad — Dallas-Fort Worth can tap into major east-west arteries and provide important links to Mexican markets. By truck, distributors can efficiently move products throughout the central United States, reaching 93% of the population within 48 hours.
Executive Vice President Dallas
Tom Pearson, SIOR
“During the economic recovery from the Great Recession of 2008, Dallas-Fort Worth has ascended to be a major national and regional distribution hub. Industrial real estate is still the preferred property type among most institutional investors, and more capital is available than ever for industrial real estate deals. Hence the influx of out-of-town developers and investors who are setting up shop in Dallas-Fort Worth to either build spec or get in the build-to-suit game by purchasing industrial land. Industrial land has become a precious commodity and is exceedingly difficult to come by due to the intense demand by developers for infill and large tracts. It is particularly frustrating for the users who want to own their own buildings. All this has led to record construction of warehouses with currently 27 million square feet in the pipeline. Those locations in most demand are the ones that have a good labor story to tell as labor is still the number one criteria for tenants.”
Texas
Dallas-Fort Worth’s location, abundance of land and strong labor force makes it one of the most popular big-box markets in the country. Leasing activity surpassed the same time a year ago with 10.4 million square feet of new transactions, much higher than the eight million square feet leased this time last year and the third highest total in North America. Net absorption was also robust at just under nine million square feet. This puts the market on course for the fifth consecutive year exceeding 10 million square feet. Despite continued strong leasing activity and positive net absorption, average first year taking rents were on par with the same time a year ago, at $3.80 per square foot per year NNN. While taking rents remain near record highs, rapidly expanding transportation costs make locating in Dallas-Fort Worth necessary to any occupiers’ supply chain and mitigates the expanding cost to rent facilities in the region. Cap rates in the region are higher than the North American average, finishing midyear at 6.6%, as the Dallas-Fort Worth market continued to offer investors the potential for higher yields compared to other core markets in the U.S.
New construction continues to be completed at a rapid pace, with 8.3 million square feet of construction completions. There is no end in sight to the massive amount of big-box development in Dallas-Fort Worth, as more than 23.6 million square feet of big-box product was under construction, an all-time record. Despite continued new development, overall vacancy rates dropped at midyear to 10.5%. This rate should remain stable in the coming quarters with the large amount of spec development slated to complete. There are plenty of reasons for optimism for the Dallas-Fort Worth big-box market in the second half of 2019 and beyond. The population is growing, with more than 26 million people within 250 miles of the core. Labor is abundant and average hourly wages for warehouse workers finished at $13.63, lower than the national average of $13.97 per hour. Corporations continue to move their headquarters into the region at a swift pace, attracting new consumers. There are plenty of tenants currently looking for space, which will keep leasing fundamentals solid in 2019.
of net absorption is 39% higher than the same time last year
8.9 million square feet
NEXT: GREATER PHOENIX
PREVIOUS: COLUMBUS
CTDI 705,955 SF 1753 Chaplin Dr. Justin, TX Direct Lease
Samsung Electronics America, Inc. 552,225 SF 400 Dividend Dr. Coppell, TX Direct Lease
Systemaxz Inc. 489,804 SF 2119 N. I-35 E DeSoto, TX Direct Lease
Petmate 468,300 SF 3201 N. Houston School Rd. Lancaster, TX Direct Lease
IDI Logistics 4,741,533 SF 11 Building Portfolio Sale Dallas-Fort Worth, TX Investment $189,661,320 $40.00 PSF
Granite REIT Holdings 822,550 SF 201 Sunridge Blvd. Wilmer, TX Investment $99,528,550 $121.00 PSF
Global Logistics Properites 494,518 SF 14601 Sovereign Rd. Fort Worth, TX Investment $33,132,706 $67.00 PSF
Cabot Properities, Inc. 289,080 SF 2710 N. Forum Dr. Grand Prairie, TX Investment $23,126,400 $80.00 PSF
78 78 78 85 87 90 94 103 112 130
33,516,320 33,516,320 33,516,320 36,652,850 37,629,864 39,360,002 40,986,322 44,590,670 49,936,211 57,068,655
7,731,422 3,773,973 3,309,599 6,770,956 7,667,709 7,255,652 7,892,166 6,938,062 9,191,445 8,985,550
23.1% 11.3% 9.9% 18.5% 20.4% 18.4% 19.3% 15.6% 18.4% 14.8%
4,999,503 6,125,424 2,750,431 1,850,911 1,749,359 2,898,714 6,938,240 4,377,581 3,852,986 1,059,349
3,137,832 3,957,449 464,374 –324,827 80,261 2,142,195 989,806 4,432,172 1,346,280 628,781
$3.86 $3.68 $4.08 $4.14 $4.24 $4.39 $4.51 $4.62 $4.76 $4.95
8.3% 7.4% 5.5% 5.6% 5.0% 6.1% 5.7% 5.0% 4.9% 5.0%
1,148,709 – – 3,136,530 977,014 1,730,138 1,626,320 3,749,466 4,178,963 780,178
– – – 698,853 1,344,038 215,000 1,724,527 2,334,554 1,908,713 2,678,528
Big-Box Buildings in Greater Phoenix (200K+ SF & 28' Clear)
91
Phoenix expanded its local interstate system, including improvements and expansions to Loop 202 and 303. this, along with its location along I-10, gives the market a significant logistical advantage in reaching the Southwest populace. Rail access is also robust with two transcontinental railroads servicing the area. The Phoenix Sky Harbor Airport is a burgeoning air cargo hub utilized by both FedEx and UPS that recently ranked 18th in the country in total cargo. The Greater Phoenix region’s biggest logistics driver is its populace. The region boasts a growing population and the third-largest labor pool for distribution occupations in the Western U.S. Distribution wages are lower than California and the state is a right to work state. With the increased need for labor because of e-commerce, the region will continue to prosper for the foreseeable future.
Executive Vice President Phoenix
Don MacWilliam
“The Greater Phoenix big-box market offers many options and solid market dynamics. We have a multitude of Class A options with rents 10-12% less than our neighbors in Southern California and Nevada. Labor is abundant, with hourly wages lower than comparative markets in the Southwest U.S. New product continues to be built along I-10 and the new loop freeways, providing a very solid foundation for logistics locally and in the region. These features, along with the growing air cargo capabilities of Sky Harbor Airport, will have occupiers expanding into the region for the foreseeable future.”
Arizona
The Greater Phoenix big-box market remains an attractive option for occupiers and investors because of its proximity to a growing population, a strong workforce base, an expanded and modernized highway system and more attractive rental rates compared to markets in Southern California. Nearly five million people live in the Phoenix metro area — the 12th highest in the U.S. — and this number is expected to grow by more than 8% in the next five years, according the U.S. Census Bureau. Phoenix also has an affordable workforce compared to other industrial markets in the Southwest, with hourly warehouse workers making an average of $14.25 per hour at midyear, much lower than the Inland Empire’s average of $14.70. The Greater Phoenix market was one of the hardest hit by the subprime mortgage collapse and subsequent recession, with overall vacancy rates for big-box product topping out at a whopping 30% in 2009. Much of that vacancy was occupied as the economy improved, dropping to 9.9% in 2012, then escalated as new speculative development increased to coincide with the demand for e-commerce fulfillment centers. The market finished midyear with an overall vacancy rate of 14.8%, 3.7 percentage points lower than the same time a year ago. Big-box vacancies decreased despite a drop in activity at midyear. Only 1.1 million square feet leased in the first half, dropping net absorption to 628,781 square feet. Despite the drop in activity, it looks like Phoenix is in line to post its sixth consecutive year of positive absorption for big-box space. Because of a double-digit vacancy rate, new development decreased at midyear to only 780,000 square feet, giving the market a respite to absorb some of the product on the market. This respite is temporary however, as 2.7 million square feet is under construction, a majority of which is in the 500,000 square feet to 749,999 square feet size range. Despite lower activity, signs point to continued growth in the Greater Phoenix big-box market in the coming quarters. There are a solid number of tenants currently in the market, ranging from e-commerce retailers to 3PLs, to data center occupiers — a growing demand driver in the region. The region will compete with Southern California for new occupiers because of its economic rents, strong labor force, availability of modern product and pro-business environment. Because of this activity there will be upward pressure on taking rents and sale prices, and cap rates will remain low for the foreseeable future.
is the lowest since 2012
14.8% vacancy rate
NEXT: HOUSTON
PREVIOUS: DALLAS=FORT WORTH
Ferrero Rocher Chocolate 648,798 SF SWC Indian School & Cotton Ln. Goodyear, AZ Direct Lease
Z Modular 222,000 SF 6205 S. Arizona Ave. Chandler, AZ Direct Lease
States Logistics 211,185 SF 1755 S. 75th Ave. Phoenix, AZ Direct Lease
Dalfen Industrial 418,651 SF 12000 N. 132nd Ave. Surprise, AZ Investment $24,101,738 $57.57 PSF
BH Properties 252,300 SF 19019 N. 59th Ave. Glendale, AZ Investment $26,499,069 $105.03 PSF
Cohen Asset Management 250,043 SF 2200 S. 43rd Ave. Phoenix, AZ Investment $24,679,244 $98.70 PSF
Geodis Logistics 611,320 SF 1 Costco Way Monroe, NJ Renewal
Colony Capital, Inc. 271,176 SF 100 Performance Dr. Mahwah, NJ Investment $61,998,969 $228.63 PSF
111 114 119 129 138 158 176 189 212 225
41,859,415 42,607,191 44,252,409 47,662,096 50,665,358 57,567,774 66,546,045 72,590,947 81,671,430 86,495,811
5,560,079 4,835,642 3,949,235 4,338,532 4,835,529 5,511,720 5,573,359 3,558,537 3,801,322 5,096,695
13.3% 11.3% 8.9% 9.1% 9.5% 9.6% 8.4% 4.9% 4.7% 5.9%
4,255,895 2,994,969 5,171,134 3,736,325 6,311,557 9,260,941 7,398,374 7,474,837 8,104,476 2,024,971
3,113,530 1,472,213 2,531,625 3,020,390 2,506,265 5,900,948 8,916,632 8,059,724 8,837,698 4,690,044
$4.57 $4.56 $4.35 $4.42 $4.46 $4.67 $5.07 $5.39 $5.03 $5.49
7.1% 6.8% 6.6% 6.4% 6.3% 6.0% 6.0% 6.0% 6.1% 6.2%
1,706,616 747,776 1,645,218 3,409,687 3,003,262 6,902,416 8,978,271 6,044,902 9,080,483 4,824,381
747,776 1,641,994 1,576,963 2,426,230 5,071,689 9,757,816 5,770,423 7,407,740 6,868,519 7,344,819
Big-Box Buildings in Houston (200K+ SF & 28' Clear)
28
187
The Port of Houston remains a top demand driver for big-box space in the region. One of the top growth ports for loaded inbound container volumes, the Port of Houston draws on recent infrastructure improvements and two rail yards to funnel product to and from warehouses in the Houston region. Among other factors, the expansion of the Panama Canal should help keep demand strong for industrial product in the market for the foreseeable future. Houston’s air cargo capabilities also continue to grow. The George Bush International Airport is currently the 16th ranked cargo airport in the U.S. Houston’s logistics advantages also include more than 2,000 trains serving the region weekly. Kansas City Southern provides intermodal service through Houston, connecting the American Midwest and Mexico.
Vice President Houston
Ryan Byrd
“Houston’s big-box market continues to grow at an unprecedented pace. The average tenant transaction size has increased, and the market has responded with building configurations to meet the demand. With an increasing number of institutional investors entering the Houston market, industrial land prices continue to set records as developers compete for the remaining development sites. Strong population growth, job growth and a diverse economy have provided Houston with steady leasing activity. There are several users in the market pushing one million square feet, including Coca-Cola and Home Depot, which are currently under construction. These larger users are becoming more common in Houston, and we expect buildings and users to continue the trend in that direction.”
Houston’s booming port and growing population is creating robust interest and increased development for big-box product in the region. More than 24 million people live within 250 miles of Houston and the city’s population is growing at a rate of 1,000 people per week. Large occupancies are keeping vacancy rates low in Houston which finished midyear at 5.9%, a 100-basis-point increase compared with the same time last year. While vacancy rates are low, they did increase because of a much-needed increase in speculative development. Despite an increase in available stock, leasing declined significantly during the first half of 2019 to two million square feet. This drop in new activity is temporary as a plethora of large tenants are currently searching for space. Despite low leasing, occupancy gains remained strong at 4.7 million square feet, as many of the large leases that signed in Q4 2018 took occupancy. Continued positive absorption increased first year taking rents to a record high of $5.49 per square foot per month NNN. Developers have taken notice of the potential of the Houston industrial market, increasing product under construction to 7.3 million square feet. Demand for big-box product in Houston will likely continue for the foreseeable future. The Port of Houston is booming with significant growth in both loaded inbound and outbound container volume. This, along with continued population growth, will increase leasing activity, investor demand, new development and taking rental rates in the coming quarters.
within 250 miles of the market’s core
24 million people live
NEXT: I-4 CORRIDOR
PREVIOUS: GREATER PHOENIX
Home Depot 770,640 SF Grand National Business Park - Fallbrook Dr. Houston, TX Build-to-suit
Plantgistix 337,040 SF Ameriport Business Park - 5623 AmeriPort Pkwy. Houston, TX Direct Lease
Builders FirstSource 275,600 SF Claymoore Business Park - 11711 Clay Rd. Houston, TX Direct Lease
Clarion Partners 601,426 SF 10433 Ella Blvd. Houston, TX Investment $49,316,932 $82.00 PSF
Zurich Alternative Asset Management LLC 554,536 SF 636 Highway 90 Missouri City, TX Investment $48,244,632 $87.00 PSF
Lexington Realty Trust 257,835 SF 10535 Red Bluff Rd. Pasadena, TX Investment NNN, Bulk/Portfolio $27,588,345 $107.00 PSF
STAG TX Holdings, LP 248,750 SF 18727 Kenswick Dr. Humble, TX Investment $29,601,250 $119.00 PSF
3
191 191 191 191 195 198 206 215 224 228
67,215,805 67,215,805 67,215,805 67,215,805 70,636,743 71,748,063 74,698,289 78,435,065 82,187,739 84,007,759
8,567,547 7,491,037 6,008,003 6,122,620 5,090,239 5,098,821 4,718,000 5,903,045 5,011,710 7,308,922
12.7% 11.1% 89.0% 9.1% 7.2% 7.1% 6.3% 7.5% 6.1% 8.7%
1,576,776 4,855,004 2,282,195 3,415,436 3,708,057 3,104,204 5,880,302 6,868,006 5,647,609 1,397,589
–391,173 1,076,510 1,483,034 –114,617 4,453,319 1,102,738 3,331,047 2,551,731 4,644,009 –477,192
$3.74 $3.89 $3.77 $4.03 $4.09 $4.32 $4.44 $4.69 $4.87 $5.07
8.0% 7.3% 9.0% 8.7% 7.0% 6.2% 6.0% 5.8% 6.3% 5.6%
– – – – 3,420,938 1,111,320 2,950,226 3,736,776 3,752,674 1,820,020
– – – 2,403,245 703,920 1,755,713 2,893,270 3,574,474 5,055,016 4,485,693
Big-Box Buildings in the I-4 Corridor (200K+ SF & 28' Clear)
16
14
192
While many parts of the country struggle with labor shortages, the entire Central Florida region has an employment concentration that exceeds the national average. Both foreign and domestic logistics companies benefit from a large available workforce and industry-focused educational programs, including Polk State Corporate College Supply Chain and Logistics Institute and Florida Polytechnic’s concentration in Material and Supply Chain. Not only is labor readily available in the I-4 Corridor, it is also affordable, with average warehouse worker wages finishing 2018 at $12.96 per hour, $1.00 an hour lower than the national average. The region is home to strong ground and rail freight capabilities including the CSX Integrated Logistics Center (ILC) in Winter Haven. The ILC has also been a major boon to all of Central Florida’s logistics and distribution industry. This centralized transportation hub features a 318-acre terminal adjacent to 930 acres of industrial and business park space slated for use by light industrial facilities and warehouse distribution centers. The region is home to two international airports (Orlando and Tampa), both with growing cargo handling capabilities. The I-4 Ultimate Project is a 21-mile makeover — from west of Kirkman Road in Orange County to east of State Road 434 in Seminole County that will improve truck flow throughout the area.
Executive Managing Director Tampa
Ryan A. Vaught
“Over the past 12 months, there has been a large concern regarding the wave of new supply hitting the market. Leasing velocity in Q2 2019, accompanied by additional LOIs signed or near signing in early Q3 2019, has provided an uptick in optimism that the market will be able to absorb the new development projects yielding elevated bullishness in 2020.”
Florida
Despite a slow start to 2019, the I-4 Corridor industrial market is one of the most dynamic industrial markets in the country. More than 21 million people live within 250 miles of the markets core, making it an ideal location for retailers, wholesalers and 3PLs to locate. Nearby Orlando is also home to a burgeoning millennial population, making the market extremely popular for distribution facilities. While most of the I-4 Corridor’s growth was previously focused on smaller industrial buildings, big-box facilities are being developed at a brisk pace, making it a big-box market to watch in the coming quarters. Big-box activity accelerated in 2016, with more than 5.6 million square feet of new leasing activity — 2017 followed suit with an additional 7.7 million square feet. This nearly 14 million square feet of leasing activity absorbed most of the available big-box stock in the region, lowering new leasing to 5.2 million square feet in 2018. Despite an influx of newly constructed and vacant inventory, leasing has been slow the first half of 2019, with only 1.4 million square feet signed. The overall vacancy rate for big-box product which finished 2018 at a decade low 6.1%, jumped back up to 8.7% at midyear. This increase in vacancy rates does have a silver lining as for the first time in two years there is vacant product larger than 750,000 square feet available to occupy. Investment activity in the region is picking up in 2019, evidenced by many large transactions signed larger than 300,000 square feet. A pickup in investment activity dropped cap rates for big-box facilities in the region to 5.6% in 2019, a number on par with the national average. The I-4 Corridor has all of the demand drivers for a pickup in big-box activity in the coming quarters. Despite a slowdown in activity, the I-4 Corridor will soon take its place as a premier big-box region in the Southeast U.S. Look for occupier interest to increase in the second half of 2019, with taking rents and investment sales continuing to ascend.
$5.07 per square foot
NEXT: INDIANAPOLIS
PREVIOUS: HOUSTON
Altadis USA 238,437 SF 2601 Tampa East Blvd. Tampa, FL Renewal
HD Supply Facilities Maintenance 160,450 SF 6850 Firstpark Blvd. Lakeland, FL Move-in
SYNCED BLANK COPY 000,000 SF Address 1 Address 2 Type
Kohlberg Kravis Roberts & Co. 491,920 SF 5300 Allen K. Breed Hwy. Lakeland, FL Investment $35,423,159 $72.01 PSF
ASB 8800 Adamo 368,664 SF 8800-8824 E. Adamo Dr. Tampa, FL Investment $26,300,90 $71.34 PSF
RealOp Investments 364,082 SF 5210 S. 16th Ave. Tampa, FL Investment $16,500,196 $45.32 PSF
American Metals Supply 213,686 SF 10840 Crossroads Commerce Blvd. Tampa, FL Owner User $15,761,479 $73.76 PSF
119 121 123 129 138 147 154 168 180 183
61,040,762 62,746,742 63,724,446 67,636,134 72,665,819 78,274,199 81,190,652 88,571,961 94,341,511 95,668,199
7,257,527 3,569,112 2,686,876 4,510,426 5,801,138 10,165,392 5,647,176 6,820,772 7,309,449 6,714,059
11.9% 5.7% 4.2% 6.7% 8.0% 13.0% 7.0% 7.7% 7.7% 7.0%
3,289,528 4,277,694 4,398,979 7,679,871 5,041,144 5,478,249 9,149,081 6,777,995 7,267,201 6,267,299
923,431 5,395,797 1,859,940 2,088,138 3,738,973 1,211,196 6,632,522 6,256,160 5,320,503 2,168,442
$2.48 $2.68 $2.95 $2.86 $3.38 $3.10 $3.33 $3.31 $3.76 $3.62
8.0% 8.1% 8.0% 7.1% 6.8% 6.2% 6.2% 5.9% 5.6% 6.0%
486,624 1,705,980 977,704 3,911,688 5,029,685 5,608,380 2,916,453 7,384,431 5,810,230 1,637,200
1,049,980 – 2,787,558 2,657,271 4,155,250 1,735,569 5,578,939 4,174,405 7,343,610 9,542,397
Big-Box Buildings in Indianapolis (200K+ SF & 28' Clear)
47
105
With access to five interstates — I-65, I-69, I-70, I-74 and I-465 — and five major railroads, Indianapolis’ central location makes it an ideal logistics hub. This advantageous location is the reason FedEx chose to house its second-largest hub at the Indianapolis International Airport. Located less than 20 minutes from downtown Indianapolis, the Indianapolis International Airport is one of the largest cargo centers in the United States, and was recently ranked seventh for total cargo handled in the U.S. As a result of its cargo capabilities, the airport generates more than $4.5 billion for the area's economy each year on average.
Senior Director Indianapolis
Jimmy Cohoat
“If you build it, they will come. This continues to be the theme in Indianapolis, with record construction completions expected in 2019. The increase in supply is dominated by speculative projects, many being leased before the buildings are delivered. Build-to-suit activity remains strong with several high-profile users already in the market adding facilities to their existing operations. Additionally, user activity in the market continues to surge with several requirements expected to sign and occupy space later this year, further driving absorption numbers. Indiana’s appealing tax structure, strong labor quality, low operating costs and business-friendly regulatory environment have and will continue to fuel additional big-box growth.”
Indiana
Indianapolis’ location affords access to nearly 43 million people within 250 miles. The city also has the advantage of being in a pro-business state with numerous tax and financial incentives. Industrial labor is abundant and hourly wages for warehouse workers are below the national average, at $13.70 per hour. Because of this, Indianapolis has become a burgeoning big-box market, with solid leasing, rental rate growth and new development. Activity picked up the first half of 2019, with more than 6.2 million square feet of new big-box-leasing activity, putting the market on pace to have its best year on record. Robust leasing kept absorption positive at 2.2 million square feet, putting the market on track for its 11th consecutive year of positive absorption. Despite strong occupancy gains, new development had a slow start in the first half of 2019, with only 1.6 million square feet completing. This drop in development was an anomaly, as a record 9.5 million square feet was under construction at midyear. Like many emerging big-box markets in the country, the Indianapolis region has a lack of product larger than 750,000 square feet despite increased demand from e-commerce occupiers. At year-end, only two buildings in this size range were fully vacant, but thankfully, 3.1 million square feet of product in this size range is under construction and will bring much needed inventory in the coming quarters. The Indianapolis market is set up for continued growth in the coming quarters. Taking rents for big-box finished midyear at $3.62 per square foot per year, and while this mark looks to rise in the coming quarters, big-box rents in the region will still remain more economical compared with nearby core markets. Occupiers will also choose Indianapolis at a greater pace compared with other Midwest markets because of its strong labor, pro-business environment and plethora of logistics advantages. All of this means robust leasing, positive absorption, more development and more investor interest in the region for the foreseeable future.
under construction is an all-time record
9.5 million square feet
NEXT: INLAND EMPIRE
PREVIOUS: I-4 CORRIDOR
PepsiCo 912,522 SF 5510 Exploration Dr. Indianapolis, IN Direct Lease
Radial 690,702 SF 1111 E. 56th St. Brownsburg, IN Direct Lease
Geodis Logistics 602,073 SF 1716 Innovation Dr. Clayton, IN Direct Lease
Industrial Logistics Properties Trust 1,036,000 SF 4255 Anson Blvd. Whitestown, IN Investment $72,250,650 $69.74 PSF
Industrial Logistics Properties Trust 962,500 SF 945 Monument Dr. Lebanon, IN Investment $51,301,250 $53.30 PSF
Industrial Logistics Properties Trust 804,586 SF 2801 Airwest Blvd. Plainfield, IN Investment $42,248,811 $52.51 PSF
Industrial Logistics Properties Trust 514,327 SF 9215 Pendleton Pike Indianapolis, IN Investment $43,501,778 $84.58 PSF
Mastin & Cain Properties 511,680 SF 764 N. Graham Rd. Greenwood, IN Direct Lease
464 467 494 530 551 588 584 609 646 658
210,254,000 213,200,000 227,645,000 249,632,000 263,974,000 267,612,000 284,593,000 298,844,000 320,088,000 325,599,700
16,736,218 11,512,800 10,319,500 12,205,000 14,888,134 14,986,272 15,083,429 16,021,701 15,628,786 15,046,589
8.0% 5.4% 4.5% 4.9% – 5.6% 5.3% 5.0% 4.8% 3.9%
16,314,000 18,136,000 15,832,000 15,767,000 21,468,000 27,178,000 37,564,000 27,244,376 34,800,000 14,659,000
11,897,000 10,678,000 3,600,000 10,640,000 12,168,000 17,374,000 17,883,400 15,706,700 21,716,000 7,302,000
$3.36 $3.60 $3.72 $3.96 $4.32 $4.56 $4.80 $4.92 $5.23 $6.12
6.8% 6.2% 5.7% 5.2% 5.4% 5.2% 5.0% 4.8% 4.5% 4.3%
667,000 2,946,000 14,445,000 21,987,000 14,342,000 3,638,000 16,981,000 14,251,000 21,244,000 5,511,000
– 2,763,000 2,100,000 16,049,000 14,648,000 14,717,000 15,606,000 18,575,203 19,235,000 22,062,000
Big-Box Buildings in the Inland Empire (200K+ SF & 28' Clear)
103
128
15
427
The Inland Empire offers a plethora of logistics advantages, including close proximity to the two largest seaports in North America: the Port of Los Angeles and the Port of Long Beach. The two ports combine to handle more than half of the loaded inbound container volume entering the United States and remain one of the top demand drivers of industrial space in the Inland Empire. The region also boasts access to two interstate highways (I-10 and I-15), offering direct transportation across the east and north United States. In addition, the UPS Regional Air Hub at Ontario International Airport serves customers throughout the western United States, Hawaii and Canada. The Ontario International Airport continues its cargo handling capabilities and is currently ranked the #12 cargo airport in the United States.
Executive Vice President Inland Empire
Mark Zorn, SIOR
“Industrial demand remains constant in the Inland Empire with average rental rates up significantly year over year. 3PLs have been the top occupier of big-box space in 2019, followed by retailers/wholesalers. YTD construction activity continues to be robust with about 30% of that BTS activity. Developers and capital continue to view the future market in a positive light which continues to push land consumption to new levels. Land Prices have risen 25% over the past 12 months along with the cost of construction driving all in building values to new peak level pricing."
California
The Inland Empire has cemented itself as the top big-box market in North America, and for good reason. At just over 325 million square feet, the Inland Empire big-box market is the largest in North America. With more than 28 million people within 250 miles of its core and a strong labor force, the Inland Empire is a leader for e-commerce distribution. This is evidenced by the more than 10 million square feet that Amazon.com occupies in the region. Not only is the Inland Empire the largest big-box market, it is also the most dynamic. Big-box occupiers continue to move into or expand within the region at a record clip, leading to robust amounts of new activity at midyear. 14.6 million square feet of big-box product leased the first half of 2019 — the most for any market in North America. This new leasing pushed overall net absorption up to 7.3 million square feet and dropped the overall vacancy rate to a record low 3.9%. One of the Inland Empire’s top advantages is the amount of land available for development, especially in the Inland Empire East. New development dropped in the first half of 2019 to 5.5 million square feet but the pace of new development will increase significantly with a record 22.1 million square feet under construction at midyear. Solid activity, especially in new Class A product continues to put upward pressure on taking lease rates, which finished midyear at $6.12 per square foot per year NNN, the highest on record. While in previous cycles, the record high rents would have been a sign of a decline in demand, this is not the case now. Since occupiers need to cut transportation costs (the highest cost in the supply chain) and get products to consumers as quickly as possible, the record high rents are less of an issue. All signs point to continued growth for the Inland Empire big-box market in the coming quarters. Tenants in the market remain robust and should be enough to occupy the development currently in the pipeline and keep vacancy rates at all-time lows. Investors will continue to try to enter and expand within the market, driving up sales prices and keeping cap rates well below the 5% range for the foreseeable future.
of leasing activity is the most in North America
14.7 million square feet
NEXT: KANSAS CITY
PREVIOUS: INDIANAPOLIS
Kimberly Clark 1,180,900 SF 4815 Hellman Ave. Ontario, CA Direct Lease
DMSI 1,109,400 SF 17350 Perris Blvd. Moreno Valley, CA Direct Lease
Amazon.com 1,000,000 SF 20901 Krameria Ave. Riverside, CA Direct Lease
Exeter Property 806,300 SF 6227 Cajon Blvd. San Bernardino, CA Investor $97,562,300 $121.00 PSF
Sares-Regis Group 759,300 SF 3100 Milliken Ave. Eastvale, CA Investor $87,319,500 $115.00 PSF
Northwest Mutual 752,600 SF 5885 Sierra Ave. Fontana, CA Investor $106,869,200 $142.00 PSF
Nissan 620,000 SF 21800 Authority Way Riverside, CA Owner User $78,740,000 $127.00 PSF
Burlington Coat Factory 800,400 SF 27582 Pioneer Ave. Redlands, CA Renewal
56 56 57 58 66 70 83 87 96 100
22,978,570 22,978,570 23,328,570 24,150,233 27,246,879 29,293,448 35,558,261 39,014,106 41,929,018 43,569,637
690,228 676,466 414,695 1,034,054 2,045,991 1,445,305 4,723,137 4,643,562 3,705,804 4,545,065
3.0% 2.9% 1.8% 4.3% 7.5% 4.9% 13.3% 11.9% 8.8% 10.4%
826,146 1,435,309 2,238,385 2,022,897 2,142,327 2,258,402 3,703,369 3,006,569 5,251,423 1,182,447
541,754 13,762 611,771 202,304 2,084,709 2,647,255 2,968,336 3,343,712 3,672,198 816,477
$3.85 $3.85 $3.71 $4.11 $4.05 $4.14 $4.24 $4.25 $4.19 $4.17
8.8% – 7.7% 6.9% 7.0% 7.6% 6.3% – 6.2% –
– – 350,000 821,663 3,096,646 2,046,569 8,655,986 4,959,713 3,681,233 1,640,619
– 350,000 821,663 1,961,624 2,443,448 5,427,032 7,891,565 3,535,661 6,202,004 4,973,604
Big-Box Buildings in Kansas City (200K+ SF & 28' Clear)
78
Kansas City is one of the most logistics-friendly industrial markets in the country. Its ground, air and rail offerings rival all other markets in the U.S. Logistics Park Kansas City (LPKC) continued to grow and attract tenants at an unprecedented pace. The park is served by BNSF Railway and continues to show the growing demand for occupiers to be near inland ports with a capacity to hold 17 million square feet of industrial buildings. There are more than seven million square feet of distribution facilities at LPKC, with speculative and build-to-suit opportunities available. In addition to its inland port and substantial rail capabilities, Kansas City is home to a growing air cargo operation. While the Kansas City International Airport only ranks 36th in total cargo, it is one of the fastest growing cargo airports in the country, showcasing the rising distribution importance of the market. Four cargo companies operate from the airport including DB Schenker, DHL, FedEx and UPS.
President Kansas City
Ed Elder
“The Kansas City industrial market continues to perform well, as distribution and e-commerce-related activity remain the key drivers of growth locally. Kansas City continues to emerge as a key national industrial market, driven by the explosion of growth related to distribution, e-commerce activity and supply chain developments. Occupiers continue to lease regional big-box facilities, as well as final-mile distribution centers in strategically located markets around the nation, and Kansas City is well positioned for future growth in terms of geography and infrastructure.”
Missouri
With just under 44 million square feet of big-box real estate, Kansas City is the smallest market showcased in this report. While the region is much smaller than the core markets, its logistics advantages provide a wealth of opportunity for both occupiers and developers. Kansas City’s geography provides a level of access to consumers that is difficult to match in North America. Like many emerging markets, a lack of available product larger than 500,000 square feet lowered new leasing activity in the first half of 2019, to 1.2 million square feet. There was a direct correlation in the drop in leasing activity and a decline in new construction, as only 1.6 million square feet completed the first half of 2019. Despite a drop in activity, net absorption was positive for the first half of 2019 and looks to be on track to finish its 10th consecutive year of positive net absorption by year-end. Despite a lower amount of speculative big-box development, vacancy rates increased at midyear by 10.4% due to move outs in older Class B product. Despite a rise in vacancies, developers realize there is a lack of new Class A product on the market, as nearly five million square feet is currently under construction, a majority of which is larger than 500,000 square feet. While new construction will significantly increase existing product on the market in the second half of 2019, much of this space should lease quickly. This should actually lower vacancy rates in the coming quarters. The market continues to do well with all occupier types but showed the most growth in the food and beverage sector in the first half of 2019, and with the market’s central location, demand from this occupier type will continue for the foreseeable future.
is one of the fastest growing cargo airports in the U.S.
Kansas City International Airport
NEXT: MEMPHIS
PREVIOUS: INLAND EMPIRE
Hostess 765,000 SF Logistics Park KC Edgerton, KS Direct Lease
Niagara Bottling 426,359 SF CenterPoint Intermodal Kansas City, MO Direct Lease
Rogers Sporting Goods 202,800 SF KCI Logistics III Kansas City, MO Direct Lease
Schafer Richardson 499,144 SF 14100 Botts Kansas City, MO Investment $18,897,59 $37.86 PSF
Jones Development 311,000 SF 500 Sumner Way Gardner, KS Investment $4,354,000 $14.00 PSF
144 145 147 151 156 161 165 172 177 183
78,710,081 79,565,959 80,445,619 82,945,243 86,132,039 90,651,932 92,433,445 97,319,115 100,461,595 103,896,590
8,905,972 7,231,994 7,630,769 8,196,869 8,052,715 8,646,048 5,899,418 5,532,381 7,754,878 4,667,076
11.3% 9.1% 9.5% 9.9% 9.3% 9.5% 6.4% 5.7% 7.7% 4.5%
2,926,865 1,301,263 3,165,842 635,427 1,026,385 1,126,409 4,657,270 6,234,922 4,782,783 4,114,542
552,143 2,511,076 3,165,842 1,029,809 200,000 2,274,594 1,401,761 1,832,407 –14,594 1,593,223
$2.65 $2.85 $2.95 $3.10 $2.80 $2.90 $3.10 $3.25 $3.50 $3.50
– 8.6% 7.8% 8.5% 7.5% 7.5% 6.0% 6.0% 6.0% 5.8%
– 855,878 234,600 1,369,892 2,075,842 2,413,241 1,781,513 2,831,630 3,142,480 –
– 879,660 2,453,040 2,322,206 3,807,052 1,506,113 3,734,920 4,893,984 3,081,340 6,991,584
Big-Box Buildings in Memphis (200K+ SF & 28' Clear)
48
46
89
Memphis International Airport is recognized as one of the world's busiest air cargo airports. Due to its popularity among passengers (140,000 each month on average) and logistics professionals alike, the airport has an estimated annual economic impact of $23.3 billion and affects 25% of the city's jobs, according to the University of Memphis. With its headquarters in Memphis, FedEx represents roughly 98% of the airport's total cargo and handles more than 180,000 packages every hour at its World Hub, which is located at the airport. Being near this hub is key for e-commerce distribution and will continue to draw occupiers to the region for the foreseeable future. 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 and home to nine fully operational rail yards with a total current container capacity of more than two million annual lifts.
Senior Vice President & Principal Memphis Region
Tim Mashburn
“The first half of 2019 has seen the Memphis industrial market continue its run of robust speculative big-box growth with seven developers under construction with just under five million square feet at midyear. Approximately 33% of the product has been leased or is under lease negotiation during construction, coupled with another two million square feet of build-to-suit projects. As vacancy has decreased, rent growth has accelerated and opened up new areas of development with the completion of I-269 (outer loop around Memphis). With the continued velocity of users in the market, the speculative availability will likely diminish before year-end and spur continued new development into 2020.”
Tennessee
Memphis is an international distribution hub with a transportation and logistics infrastructure that is second to none. Because of this, occupiers and developers alike are increasing their big-box footprint here. Despite continued demand, Memphis remains the most economical big-box market in North America, with taking rents averaging only $3.50 per square foot per year NNN at midyear. At midyear, 4.1 million square feet of big-box product leased in Memphis, nearly equaling the total in all 2018. This significant amount of activity coupled with no big-box construction completions lowered the overall vacancy rate to a decade low 4.5%. The lack of new construction is temporary however as a record seven million square feet is under construction, a majority of which is in product larger than 500,000 square feet. Not only are institutional investors building more in the region, they are also increasing their portfolios by purchasing existing stock. Sealy and Company and Blackrock both made significant investments in the region, this activity coupled with robust market fundamentals lowered the average cap rate in the region to a decade low 5.8% at midyear. As fundamentals continue to improve in Memphis, look for institutional capital to flow into the region as a stronger clip in the second half of the year. Despite a decade low vacancy rate, the future looks bright for the Memphis big-box market in the coming quarters. Many tenants are in the market and this looks to continue into the second half of the year as occupiers increase their presence near Memphis’ important logistics hubs. Because of this, look for newly constructed space to quickly absorb, keeping vacancy rates stable and putting rents on an upward trajectory for the foreseeable future.
under construction is the most in over a decade
6.9 million square feet
NEXT: NORTHERN CALIFORNIA
PREVIOUS: KANSAS CITY
Kellogg 767,000 SF Gateway Global Logistics Center Byhalia, MS Direct Lease
Ceva Logistics 648,750 SF 5166 Pleasant Hill, Southpoint Memphis, TN Renewal
Protective Industrial Products 595,612 SF 8331 Frontage Rd. I-22 Logistics Center Olive Branch, MS Direct Lease
Sealy & Company 1,106,876 SF 7755 Polk Ln. Williams-Sonoma Bldg. Olive Branch, MS Investment $48,005,212 $43.37 PSF
Ozark Automotive 581,475 SF 1241 Commerce Pkwy. DeSoto 55 Logistics Center Southaven, MS Owner User $27,625,877 $47.51 PSF
Blackstone Group 212,098 SF 4020 Quest Way Memphis Distribution Center Memphis, TN Investment $5,646,048 $26.62 PSF
Sealy & Company 207,472 SF 5400 Distriplex Farms Distriplex Farms Memphis, TN Investment $6,765,662 $32.61 PSF
Amazon 554,040 SF 191 Norfolk Southern Way Gateway Global Logistics Center Byhalia, MS Direct Lease
170 171 173 174 178 184 192 206 227 232
68,783,402 69,988,677 70,531,230 72,038,679 73,707,317 76,810,059 81,370,181 88,533,174 98,054,253 100,243,557
8,706,545 7,507,925 7,262,915 7,987,237 7,219,271 4,783,860 4,306,708 6,397,531 7,223,064 7,584,204
12.7% 10.7% 10.3% 11.1% 9.8% 6.2% 5.3% 7.2% 7.4% 7.6%
3,512,862 5,750,290 4,772,877 3,621,946 5,601,797 7,105,145 5,266,954 8,748,462 10,988,588 4,444,109
302,640 2,403,895 787,563 783,127 1,645,066 4,714,293 3,093,067 4,764,626 9,771,986 2,809,644
$5.74 $5.20 $5.49 $5.26 $5.55 $5.99 $5.42 $5.73 $6.26 $6.42
5.5% 5.3% 5.2% 4.5% 4.1% 5.8% 4.3% 3.9% 4.1% 3.6%
– – 200,022 1,017,353 1,668,638 2,780,177 4,964,400 6,896,404 9,521,079 2,374,497
– 200,022 1,017,353 1,418,638 3,772,861 4,394,847 6,655,524 9,065,336 9,376,480 8,691,372
Big-Box Buildings in Northern California (200K+ SF & 28' Clear)
24
170
Northern California is home to both the Port of Oakland and the Port of Stockton. The Port of Oakland is a world-class international cargo transportation and distribution hub. Located on the mainland shore of San Francisco Bay, Oakland was among the first ports globally to specialize in the intermodal container operations that has revolutionized international trade and stimulated the global economy. The Port of Stockton is located in the San Joaquin Valley and is situated near four major freeways and two transcontinental railroads. Occupiers of big-box space in Northern California can also take advantage of four cargo airports including Oakland International Airport — the 11th largest cargo airport in the U.S. — San Francisco International Airport, San Jose International Airport and Sacramento’s Mather Airport — a growing air freight hub in Northern California.
Executive Vice President Oakland
Greig Lagomarsino, SIOR
“The Northern California industrial market continues to benefit from strong demand from a wide range of users — many of whom are servicing the booming local economy and strong businesses expanding their e-commerce platforms. With vacancy rates throughout the region in the low-to-mid-single-digit range, new speculative development is underway in virtually every submarket. Rising costs of construction, tight labor markets and rising land prices continue to put pressure on new development yields.”
Northern
Even though Northern California is more widely known as a key hub for the tech industry, the region is becoming a major big-box industrial market. Demand for big-box product has exploded due to the rise of e-commerce, as occupiers scramble to service the growing young population in the area. Northern California is really a tale of three markets, the first of which is the East Bay — a mature market near the Port of Oakland. Vacancy rates remain relatively low, with record-high taking rents in the market. Because of land constraints in the Oakland area, big-box development has shifted to the growing Stockton/San Joaquin County region, where just over 90% of new construction and all the top transactions were completed. While a majority of the big-box development and activity is in Stockton/San Joaquin County, Sacramento is becoming an emerging big-box market on its own. Occupiers and developers are looking at the market as a big-box alternative because of its ample and affordable labor. Demand and taking rents continue to ascend in Northern California. A solid 4.4 million square feet leased in Northern California, keeping net absorption positive at 2.8 million square feet. Taking rents finished midyear at an all-time high at $6.42 per square foot per year NNN. Taking rents fluctuate significantly depending on the market the building is located, however. East Bay taking rents finished midyear at $9.30 per square foot per year, while Stockton and Sacramento produce much more economic taking rents of $6.12 per square foot per year and $6.24 per square foot per year NNN, respectively. As the region continues to grow, big-box product demand will likely increase, leading to continued new development, strong leasing, robust investment and continued taking rent growth. Stockton/San Joaquin County will continue to lead the way in new speculative and build-to-suit development, while Sacramento will also be viewed as a viable alternative. While East Bay is definitely an infill market, the needs of occupiers to be near the Port of Oakland and San Francisco could lead to some redevelopment and/or construction of multistory warehousing.
$6.42 per square foot
NEXT: NORTHERN-CENTRAL NEW JERSEY
PREVIOUS: MEMPHIS
Tesla 870,294 SF 17100 Murphy Pkwy. Lathrop, CA Direct Lease
Katerra 567,870 SF Northeast Industrial Area Tracy, CA Build-to-suit
Best Logistics 530,752 SF 340 Port Rd., Bldg 22 Stockton, CA Direct Lease
Bentall Kennedy 1,122,341 SF 4532 Newcastle Rd. Stockton, CA Investment $105,298,033 $93.82 PSF
Invesco 861,000 SF 2920 & 2950 Cordelia Rd. Fairfield, CA Investment $99,996,540 $116.14 PSF
LBA Logistics 624,356 SF 3771 Channel Dr. West Sacramento, CA Investment $39,300,000 $62.94 PSF
Dermody Properties 655,976 SF 1624 Army Ct. Stockton, CA Investment $35,422,704 $53.77 PSF
Prism Logistics 443,640 SF 1030 Runway Dr. Stockton, CA Direct Lease
177 179 181 184 198 202 210 225 248 256
76,306,247 76,789,422 77,259,272 78,812,822 85,907,606 87,650,838 91,097,705 97,709,134 108,897,210 113,179,401
10,223,808 6,875,435 4,481,869 4,157,431 6,826,835 6,655,480 3,294,054 2,302,766 3,283,445 3,002,492
13.4% 9.0% 5.8% 5.3% 7.9% 7.6% 3.6% 2.4% 3.0% 2.7%
8,997,079 10,355,470 9,386,313 8,059,956 11,021,790 11,270,655 12,891,551 11,115,522 13,025,351 9,607,871
3,168,916 3,831,548 2,863,416 1,877,988 4,425,380 1,914,587 6,808,293 7,602,717 10,207,397 4,373,658
$4.62 $4.09 $4.56 $4.94 $4.65 $5.02 $7.27 $6.52 $8.17 $7.57
8.3% 6.9% 5.1% 6.5% 7.5% – 5.2% 5.1% 6.1% –
269,204 483,175 469,850 1,553,550 7,094,784 1,743,232 2,785,637 6,611,429 11,188,076 4,282,191
483,175 243,750 1,890,658 5,297,857 2,058,621 3,006,520 8,617,360 17,484,505 8,530,807 7,230,673
Big-Box Buildings in Northern-Central New Jersey (200K+ SF & 28' Clear)
32
182
The Northern-Central New Jersey market is home to the busiest seaport on the East Coast of the United States — the Port of New York and New Jersey — which remains as one of the top demand drivers for industrial real estate in the region. Of all the U.S. ports, the Port of New York and New Jersey is best positioned to take advantage of the increased imports that have resulted from the expanded Panama Canal. The raising of the Bayonne Bridge to accommodate Post-Panamax ships have keep import volumes for the Port strong despite the current disruptions in global trade. The region’s logistics advantages go beyond the sea with many interstate highways passing through the region. The area is also one of the top air transportation regions in the country, giving occupiers close access to two of the top 15 cargo airports in the country — John F. Kennedy International Airport in New York and Newark Liberty International Airport in New Jersey.
Executive Managing Director Woodbridge
Michael Markey
“New Jersey’s big-box industrial market began the first half of 2019 with a 39.4% slowdown in new deliveries compared to the same period last year. Construction figures are down, however this is not due to a decrease in demand but instead the decrease of available land breaking ground. Developers have turned to redevelop outdated inventory or contaminated sites for remediation to meet tenant demand. For example, a joint venture between Advance Realty and Greek Development are breaking ground on a former brownfield site near Exit 12, which, once completed, will be an industrial park of eight buildings comprising 4.1 million square feet named the Linden Logistics Center.”
Northern-Central
New Jersey
Surrounded by more than 61 million people within 250 miles of its core, the Northern-Central New Jersey market services the largest population concentration in the country. Because of its location and robust logistics advantages, occupier demand remains strong for big-box product with vacancies finishing midyear at 2.7%, the lowest big-box vacancy rate in the United States and second to Toronto in North America. Demand from e-commerce retailers kept new leasing activity robust at midyear at 9.6 million square feet, putting the market on pace to set an all-time record by year-end. Strong leasing activity kept absorption positive, at 4.3 million square feet. While this is a respectable amount, it was much lower than the 6.6 million square feet absorbed at the same time a year ago. Low vacancy rates and robust activity are keeping taking rents high, at $7.57 per square foot per year NNN —the highest taking rent for big-box space in the United States and again, second only to Toronto in North America. Development was robust in 2018, with a decade high 11.2 million square feet completed, however new construction has declined in the first half of 2019 to 4.3 million square feet due to a dwindling supply of available land to develop. While under construction product is also on the decline, developers are still finding some sites in the region, with 7.2 million square feet under construction. Not surprisingly, much of this space is showing strong demand and will be taken quickly in the coming year. Big-box vacancies are projected to stay near record lows in the coming quarters. Despite the need for new big-box space, land is getting harder to find, especially in Northern New Jersey. Because of this, redevelopments of older industrial, retail, or even Class B office space will increase in the region, despite the higher costs. The region could also see interest for future multistory warehouse development, although, at the time of this report, the immediate plans for these types of buildings were centered within the five New York City boroughs.
live within 250 miles of the market core
61 million people
NEXT: SOUTHERN NEW JERSEY-EASTERN PENNSYLVANIA
PREVIOUS: NORTHERN CALIFORNIA
Wayfair 953,595 SF 343 Half Acre Rd. Cranbury, NJ Direct Lease
Crate & Barrel 870,950 SF 353 Half Acre Rd. Cranbury, NJ Direct Lease
Amazon 625,000 SF 495 Weston Canal Rd. Somerset, NJ Direct Lease
IDI Logistics 1,351,200 SF 340 Middlesex Center Blvd. Monroe Township, NJ Investment $132,728,376 $98.23 PSF
IDI Logistics 751,450 SF 101 Middlesex Center Blvd. South Brunswick, NJ Investment $73,814,934 $98.23 PSF
SHI International Corp. 396,750 SF 400 Ridge Rd. Piscataway, NJ Owner User $59,512,50 $150.00 PSF
347 352 361 369 382 406 443 471 496 503
174,779,432 181,141,185 185,866,328 194,049,729 194,049,729 228,362,024 243,417,093 245,581,633 264,037,108 267,647,727
17,047,991 12,756,043 16,222,192 12,326,948 7,794,760 9,985,132 12,318,210 13,686,422 18,854,992 19,123,064
9.8% 7.0% 8.7% 6.4% 4.0% 4.4% 5.1% 5.6% 7.1% 7.1%
882,148 1,021,551 502,269 2,423,248 4,096,500 4,113,609 6,638,719 8,090,030 10,872,709 11,129,244
5,202,055 6,930,394 2,895,604 8,620,387 12,715,589 11,135,845 18,233,247 15,686,180 13,420,298 3,342,547
$3.63 $4.01 $4.04 $4.08 $4.15 $5.04 $5.06 $5.11 $5.22 $5.16
– 8.1% 8.4% 7.6% 6.7% 5.9% 5.9% 5.7% 5.5% 5.8%
1,045,000 2,638,446 6,361,753 4,725,143 8,183,401 13,326,217 20,986,078 16,423,281 18,455,475 3,610,619
1,664,946 3,823,473 5,019,909 7,291,433 12,480,079 14,384,906 9,423,205 16,791,571 22,499,915 23,889,673
Big-Box Buildings in Southern New Jersey-Eastern Pennsylvania (200K+ SF & 28' Clear)
7
111
101
291
The Southern New Jersey–Eastern Pennsylvania market is one of the most logistics-friendly markets in the country. The region is centrally located along the East Coast, giving it the capability to handle container volumes from three major seaports: the Port of New York and New Jersey, the Port of Baltimore and the Port of Philadelphia. Two Class I railroads (CSX and Norfolk Southern) and 100 major interstate interchanges are located within the region. In addition, five airports with major cargo handling capabilities are within 90 minutes of the region. This includes the Lehigh Valley International Airport, which was one of the fastest growing cargo airports in the U.S. in 2018.
Senior Managing Director Conshohocken
Mark Chubb
“Although annual net absorption is anticipated to top 2018’s total because of robust leasing, year-to-date net absorption was down because of a slow first quarter. Retail distribution center closures (i.e. Sears) have also added previous generation availability. The speculative construction pipeline appears to be slowing in the I-78 and I-81 corridor markets. There is an active entitlement pipeline in suburban Philadelphia and Southern New Jersey, but it is unlikely that any other projects greater than 500,000 square feet will commence before the end of 2019. Asking rent growth continues in all market areas, but the average signing rent appeared to dip as the result of two one-million-square-feet deals. Previous generation buildings in areas with abundant labor and “deal maker” ownerships continue to generate deals.”
Southern New Jersey
Eastern Pennsylvania
At approximately 268 million square feet, the Southern New Jersey-Eastern Pennsylvania market is the second-largest big-box market in North America. With more than 58 million people within 250 miles of its core and a plethora of logistics advantages, the market continues to post robust fundamentals. This is evidenced by the record-breaking 11 million square feet of big-box leasing activity and three million square feet of net absorption in the first half of 2019. Retail companies continue to expand within the region in droves, with Lowes and Ferrero’s signing large deals in the first half of 2019. Despite strong leasing and net absorption, the overall vacancy rate was stable compared with year-end at 7.1% because of robust speculative development. There is no end in sight for the amount of newly constructed product hitting the market, as a record 23.9 million square feet was under construction at midyear. Sales activity also continues to be strong for investors during the first half of the year, with U.S. Realty Advisors and Colony Capital expanding its portfolios by more than one million square feet. These purchases, along with a multitude of others, kept the cap rap low at 5.8%. With economic conditions in the U.S. stable in the near-term and the surrounding East Coast ports performing well despite global trade concerns, big-box fundamentals should remain healthy in the region for the foreseeable future. A majority of the seven vacant buildings larger than 750,000 square feet, along with a good chunk of the 23.9 million square feet of under construction product will be taken, meaning another year of positive net absorption. Taking rents will start ascending and the overall vacancy rate should stay at or near its current rate in the coming quarters.
of leasing activity is the 2nd highest in North America
11.1 million square feet
NEXT: TORONTO
PREVIOUS: NORTHERN-CENTRAL NEW JERSEY
Lowe's 1,200,000 SF 4532 United Dr. Shippensburg, PA Direct Lease
confidential 1,138,320 SF 801 Centerville Rd. Carlisle, PA Direct Lease
Ferrero USA 738,720 SF 112 Bordnersville Rd. Jonestown, PA Direct Lease
U.S. Realty Advisors LLC 1,446,888 SF 400-500 S. Muddy Creek Rd. Denver, PA Investor $117,053,239 $80.89 PSF
Colony Capital 1,430,011 SF Capital Logistics Center: 200-400 Capital Lane; 300, 600 Hunter Lane; 500 Industrial Middletown, PA Investor $103,246,794 $72.20 PSF
Colony Capital 1,082,200 SF 270 Midway Rd. Bethel, PA Investor $79,574,166 $73.53 PSF
Spreetail 612,560 SF Dundee Rd. Wilkes Barre, PA Direct Lease
Gramercy (Blackstone) 652,411 SF 240 Mantua Grove Rd. West Deptford, NJ Investor $77,937,018 $119.46 PSF
580 582 585 590 596 600 603 607 615 622
217,010,213 217,500,775 219,516,783 222,203,834 224,320,580 226,162,325 227,352,258 230,617,779 233,250,145 236,425,420
13,040,032 9,713,940 9,059,724 8,870,051 8,621,388 4,360,858 6,433,892 3,767,339 2,018,222 2,703,211
6.0% 4.5% 4.1% 4.0% 3.8% 1.9% 2.8% 1.6% 0.9% 1.1%
4,184,941 2,332,668 2,354,973 5,862,055 3,826,678 4,819,034 6,380,295 5,536,250 10,557,390 2,895,469
1,547,702 3,816,654 2,670,224 2,876,725 2,365,409 6,102,275 1,943,474 3,511,477 5,280,123 1,975,401
– – – – – $5.78 $6.01 $6.36 $6.91 $8.43
– – 6.5% 6.6% 6.8% 6.6% 6.0% – – –
– – 2,180,723 1,386,011 2,361,701 3,404,213 2,878,961 5,354,212 2,487,908 604,295
– – 5,476,747 3769675 7,370,604 6,821,355 5,862,245 1,934,408 6,212,706 6,915,991
Big-Box Buildings in Toronto (200K+ SF & 28' Clear)
524
The Greater Toronto Area (GTA) is an ideal logistics hub due to its superior access to major 400-series highways — 401, 407, 409, 427, 403, 400 and 404 — providing connectivity to locations across southern Ontario and to U.S. border crossings. The GTA also offers connectivity to two major railroads, the Canadian National Railway (CN) and the Canadian Pacific Railway (CP), with multiple intermodal yards located in Milton, Brampton, Caledon and Vaughan. Canada’s largest and busiest airport, Toronto Pearson International Airport, is also centrally located to the GTA markets and processes more than 45% of Canada’s air cargo.
Executive Vice President Toronto
Colin Alves, SIOR
“The Greater Toronto Area is experiencing solid levels of absorption, even with a constrained speculative development pipeline, particularly in excess of 400,000 square feet. Vacancy is close to 0% in several submarkets. Q2 2019 rent growth was in excess of 20% year over year and this trend is expected to continue. With high levels of pre-leasing activity, tenants are exploring building deliveries in 2021."
Canada
The Greater Toronto Area market is the third-largest big-box market in North America. The region has become home to many e-commerce fulfillment/distribution centers for companies such as Amazon.com, Wayfair and IKEA, that are drawn to the region’s vast transportation infrastructure. Demand has been strong for big-box product in the market for quite some time, leading to one of the lowest overall vacancy rates in North America. Vacancy rates remain the lowest in North America, increasing slightly from the record low 0.9% at year-end to 1.1% at midyear 2019. There are very few full building vacancies on the market, with only four options at year-end, none of which are larger than 500,000 square feet. Despite the low amount of full building vacancies, leasing activity was solid to start 2019, at 2.9 million square feet. There might be no market in greater need of new big-box development than Toronto, and because of this, 6.9 million square feet was under construction at midyear. However, much of this space is already spoken for and won’t provide much of a relief for the record low vacancies in 2019. Despite a pickup in under-construction product, the prospect for future development is murky due to a scarcity of available land, as well as a difficult entitlement process in the region. As long as the inventory of available product remains limited, vacancy rates are likely to stay at record lows. In the coming quarters, absorption is expected to remain positive but lower than previous year’s totals while taking rents will escalate at a faster pace for the foreseeable future.
is the lowest in North America
1.1% vacancy rate
NEXT: ATLANTA
PREVIOUS: SOUTHERN NEW JERSEY-EASTERN PENNSYLVANIA
Polar Pak 399,548 SF 2 Bramkay St. Brampton Direct Lease
Give & Go 375,000 SF 150 Gibraltar Rd. Vaughan Direct Lease
3M 318,805 SF 2751 Peddie Rd. Milton Renewal
Triovest 406,485 SF 95 Market Dr. Milton Owner User $69,102,450 $170.00 PSF
PIRET 361,800 SF 2562 Stanfield Rd. Mississauga Investment $37,989,000 $105.00 PSF
PIRET 313,500 SF 999 Boundary Rd. Oshawa Investment $26,691,000 $86.00 PSF
Wesbell Logistics 264,860 SF 6135 Kennedy Rd. Mississauga Sublease
CanFirst 288,161 SF 1121 Walkers Line Burlington Investment $30,833,227 $107.00 PSF
*Taking NNN rent is in CAD.