Texas is the hottest market for industrial development, according to a top 10 list of states by construction value published in a new report by the NAIOP Research Foundation, “Economic Impacts of Commercial Real Estate, 2015 Edition.”
Here’s how the top 10 for industrial shaped up, plus a look at what’s happening in those markets today:
- Texas – Houston has the tightest industrial market in the state, says the Houston Business Journal, noting that, despite declining oil prices, 4.5 million square feet of industrial space was delivered in the Houston area April-June 2015. Market vacancy rates are a low 4.8 percent.
- Louisiana – Manufacturing of petroleum and coal-based products are the drivers here, says a Cushman & Wakefield report, but the dip in oil prices is having an impact. Louisiana Commercial Realty says that the 40 percent drop in oil price over the last year correlates to a drop of 4,000 from the payroll in the goods-producing sector. Oil accounts for 12 percent of Louisiana’s real gross domestic product – around $73 billion.
- Nevada – Colliers reports that Southern Nevada’s industrial market is booming – 789,000 square feet of industrial was delivered in Q215 and net absorption in the second quarter was 1.86 million square feet (of that, 57 percent of that was in warehouse/distribution). Asking rental rates remained stable at 57 cents per square foot on a triple net basis.
- Oklahoma – Oklahoma City market trends data indicates an increase of 10 percent in the median asking price per square foot for Industrial properties compared to the prior 3 months, says LoopNet, with an increase of nearly 32 percent compared to last year’s prices.
- Washington – Puget Sound demand is strong, with 68.2 million square feet of positive net absorption in Q2, says CBRE. More than 41 million square feet were delivered in Q2 – with another 87.8 million projected for the year – are fulfilling demand in both core distribution and key secondary markets, with substantial activity in e-commerce, food/beverage, and third-party users.
- Arkansas – Northwest Arkansas is one of the nation’s fastest growing for population and job growth, says CBRE, with demand from growing operations of Walmart, H.J. Heinz, S.C. Johnson and Sons Inc., Tyco, Mars, Toshiba, and Gates Corporation.
- Georgia – Cushman & Wakefield says the metropolitan Atlanta submarket gained 481,000 square feet of positive net absorption during Q215 – a positive bounce from the negative 100,000 net square feet of absorption seen during Q1. The boosts came from the completion of a 1.2 million square foot Walmart distribution center and a 1 million square foot speculative distribution facility.
- Indiana – Low property taxes in the Hoosier State attract tenants, says Marcus & Millichap. Employment growth in Indianapolis is up a half percent year-over-year, vacancy rates remain steady, and asking rates per square foot are up 5 cents.
- Minnesota – The Minneapolis/St. Paul industrial markets show no signs of slowing down, says CBRE, with the highest level of industrial product delivered since 2001. CBRE says the 1.7 million square feet delivered in Q115 yields a second phase of construction and development that will last through the remainder of the year.
- Oregon – JLL says that, at 4.2 percent, vacancy in the Portland industrial market is at its lowest point in over 20 years. Sixty-one percent of the industrial product to be delivered in 2015 is speculative.
This is part of a series of informational posts on the Research Foundation’s valuable report, “Economic Impacts of Commercial Real Estate, 2015 Edition.” Report data was provided by Dodge Data & Analytics; the report was written by Dr. Stephen S. Fuller and published by the NAIOP Research Foundation in June 2015. Download the full report and check back for more analysis and excerpts.
Kathryn Hamilton, CAE, is Vice President for Marketing and Communications at NAIOP Corporate.