On the Brink of A Modern Industrial Revolution

September 26, 2014

Industrial commercial real estate is picking up across the country. From land and building sales to leasing and development, this sector is making a comeback.

As the economy continues to strengthen, industries such as auto manufacturing, energy, food processing and third party logistics are expanding. However, the powerhouse of industrial real estate continues to be warehouse and distribution space, which fell to 11.3 percent vacancy in the second quarter, according to CCIM Institute.

“I think the national industrial market has improved pretty dramatically,” says Terry E. Smith, CCIM, SIOR, executive vice president and partner at Colliers International in Nashville. “In some markets there is a lot of optimism, while in others there is more cautious optimism. But, I think everybody feels pretty strong about the market coming back and improving,” says Smith.

The increase in demand, especially in warehouse space, has created new opportunities for commercial real estate investors looking to buy and develop. It is predicted by Reis that the new supply of industrial space will reach nearly 50 million sf this year. Even for industrial commercial real estate leasing, rental rates have increased more than 140 percent from February 2012 to May 2014. Rates have gone from 25 cents per sf per month triple net in 2012 to 60 cents psf per month currently.

Ecommerce distribution companies, such as Amazon, are in need of “big box” cubes to house product. The most coveted spaces are 100,000 sf and greater with ceiling heights in excess of 30 feet and trailer parking. Smart investors are realizing this growing demand and buying older, out-of-use properties at below replacement cost to renovate and meet modern industrial needs, such as high ceilings, improved utilities, HVAC, more dock doors, and additional land for truck and employee parking.

The Intelica Industrial Services Group uses industrial commercial real estate data and a comprehensive approach to deliver these services to our business partners: strategic planning, corporate finance, location advisory, asset management, government incentives analysis and construction management. Contact us to learn more.