What’s Driving a Hot Leasing Market for Industrial Properties?

Posted by Sean Murphy on April 12, 2019

Looking for companies to lease your warehouse or empty retail space? Increase your chances by targeting e-commerce and logistics companies. According to a new CBRE report, these companies dominated warehouse deals in 2018.

Together, they took up 61 out of the 100 largest warehouse transactions based on square footage. They filled up 61.5M square feet of warehousing space. In 2017, these two industries accounted for 52 of the largest leases for 43.2M sq. ft.

Check out the top markets for warehouse deals in 2018:

  • Dallas / Fort Worth
  • Inland Empire (Southern California)
  • Pennsylvania I-78/81 Corridor
  • Atlanta
  • Chicago

JLL research confirms almost the same thing CBRE did. With the market at structural lows, rents proceed to climb, albeit at a slower rate. In addition to the top markets from CBRE, JLL adds:

  • Central Valley (Northern California)
  • Indianapolis
  • St. Louis
  • Baltimore
  • New Jersey

A couple of industries also worth a look include manufacturing and food and beverage operations.

Of the 47 markets tracked in 2018 by Transwestern's Real Estate Outlook, 43 had positive net absorption. Realized defines net absorption: "The amount of occupied space at the end of a period less the amount of space occupied at the beginning of the same period." Transwestern also finds that rent has increased for the sixth year in a row.

Obviously, the demand for industrial space soars. It can lead to big opportunities for property managers and owners, even those with vacant retail centers.

What About Those That Aren't Set up for Industrial Property?

It's possible to reconfigure commercial property for logistics and warehousing. Properties designed for retail can be reconfigured as they'd get a fast ROI with the right tenant.

The ones with the upper hand are properties that are free-standing big-box stores near population centers, especially those in the top markets. Many of these industrial property projects sit in locations that have a median household income below the national average.

Other things that make a property attractive are ample parking spaces, overhead doors, docks, and clear heights. You get bonus points if your property has three-phase power. Some businesses will need this to run machines that require the extra volts available with three-phase power.

Properties with surveillance systems in place may stand out from competitors. Many properties that undergo construction can be at risk for theft and vandalism. When you have live video monitoring in place, it could make your property more attractive for potential industrial and logistics tenants.

To learn more about remote video surveillance for warehousing and logistics properties, please contact us.

Posted in: News, Video Monitoring