Secondary warehouse and distribution center markets such as Denver, Detroit and Portland are poised for growth, as the push to build out and modernize supply chains enters its next phase, according to a new report from CBRE Group, Inc., Los Angeles.
Most development of warehouses in the United States since 2011 has occurred in primary industrial markets such as Atlanta, Chicago and Greater Los Angeles. Those 13 primary markets saw a 30% increase in average rental rates and a decline to 4.9% vacancy in that span, according to the report.
In contrast, secondary industrial markets in the United States now are in better position than primary markets to absorb growth. Average rents in 17 U.S. secondary markets have increased by only 13% since 2011. But, developers should be encouraged that the average rent in those markets has pushed past their pre-recession levels.
In addition, vacancy in those secondary markets stands at 6%, and it still is steadily declining.
“As infrastructure for e-commerce fulfillment expands, the industry will seek to expand its real estate footprint in secondary markets to better cover a larger portion of population centers and increase delivery speeds,” said David Egan, head of industrial and logistics research. “As this unfolds, second-tier industrial markets like Cincinnati, Louisville, Charlotte and others offer ideal market fundamentals for developers and e-commerce companies looking to expand their supply chains.”
Survey: Secondary logistics markets poised for growth
Secondary industrial markets in the United States now are in better position than primary markets to absorb growth.
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