2017 is going to be an important year for these up-and-coming industrial markets. We will discuss below why each market is unique, but how they all share common denominators such as nearby hubs, lower rental rates, available land ready for development, large nearby populations and skilled workforces. Let’s take a look at what the year has in store for the industrial market.
2016 was a record-breaking year for Columbus in terms of new supply from construction projects. Amazon just completed two fulfillment centers that total 1.9 million square feet. There has been a surge of construction over the past three years, which has been a reason for the gain in occupancy of 26 million square feet of new inventory. Rental rates are stable in Columbus at $3.36 per square foot per year NNN. This Ohio city is sure to be one of the most exciting industrial markets to watch in 2017.
Denver has just seen its fifth consecutive year of occupancy gains in their industrial market. And, just last year they had the highest activity of construction that they have seen in 15 years with more than 3.6 million square feet under construction. Rental rates have reached levels that allow construction to be possible despite the historically high construction costs. There are an extremely high level of high-paying jobs in the Denver area that in turn have attracted more than 150,000 people to the area between the years of 2010 and 2015. That has been a major help to the city.
- GREATER PHOENIX
The greater Phoenix area has moved up in the ranks even since last year. The city ranked number nine just last year. In the development corner, 5 million square feet were completed in 2016 with an additional 6.5 million square feet expected to be delivered in 2017. Rental rates are on the rise over the past five years and in 2016, asking rents rose more than 4%. The vacancy rate is the lowest it has been since 2007.
Some have dubbed Greenville-Spartanburg-Anderson as the future “Inland Empire of the East Coast”. Located very close to the ports of Charleston and Savannah, and plenty of land for development, this growing industrial market is dominating the area. BMW and Michelin are based here and with the land available for development and rental rates at around $3.28 per square foot per year, we are sure to see many more big names making this their home base too.
Indianapolis has an advantage with its centralized location in the Midwest. It is home to the second-largest FedEx hub in the world. Roughly 4 million square feet of product completed construction in 2016 and about 6.4 million square feet is already underway for this year. Rental rates are well-prices at below $4 per square foot NNN. This area is known as the “Crossroads of America” so it’s safe to say they have a logistical advantage.