As demand pushes costs higher in supply-constrained, mostly coastal markets, many developers have accelerated plans in lower-cost inland markets, with a heavy emphasis on the Sun Belt region. While traditionally attractive industrial markets such as Chicago, Los Angeles and Northern New Jersey have not lost their luster, Sun Belt markets now account for more than half of industrial projects nationwide. The table below, based on CommercialEdge data, highlights the top five markets in the region based on square footage under construction.
|Rank||Market||Under Construction (MSF)||Inventory (MSF)||Percentage of Stock|
5. Memphis, Tenn.
Boasting low costs and an abundance of open land, Memphis, Tenn., took the fifth spot on our list, with 17 industrial projects under construction totaling 12.2 million square feet. More than half of the square footage underway—56.2 percent—was in DeSoto County, just south of the city, which has long been a draw for developers. Since 2018, nearly 7.1 million square feet has delivered in the submarket.
The largest project underway was Hillwood’s 1.1 million-square-foot Marina Commerce Center, located at 10480 Marina Drive in Olive Branch, Miss. The speculative distribution center broke ground last fall and is slated for delivery in late 2021. Colliers is marketing the cross-dock development, which will include 196 loading docks, 185-foot truck courts and minimum clear heights of 40 feet.
4. Inland Empire
Overwhelming industrial demand in the Inland Empire continues to drive rents higher and higher, up 8.2 percent for the 12 months ending in March. As a result, despite some land availability constraints, development continues at full speed, with 74 projects comprising 15.7 million square feet underway.
The second building at Real Estate Development Associates and Clarion Partners’ Ontario Ranch Logistics Center in Ontario, Calif., is the largest development underway in the market. The 1.2 million-square-foot facility is a build-to-suit project for Uline, which signed its lease last spring. The property, located on 48 acres at 4810 S. Hellman Ave., is scheduled to wrap up in early 2022.
Phoenix has been home to a major industrial expansion in recent years. Last year alone, nearly 13 million square feet delivered, with close to an additional 5 million completed in the first three months of 2021. Developers had 16.4 million square feet under construction in mid-April, owing to—among other factors—the market’s cost advantage over Southern California and its location being a day’s drive from the Port of Los Angeles.
Amazon’s 2.3 million-square-foot robotics-assisted facility in Goodyear, Ariz., was the largest project under construction in mid-April. Construction on the four-story structure began in July 2020, and work is expected to finish in early summer. The development is one of many the e-commerce giant is undertaking across the country: Amazon is either the owner or sole tenant in nearly half of all developments of more than 1 million square feet underway.
Despite having one of the highest vacancy rates across the country in March—11 percent, compared to the national rate of 6.1 percent—industrial developers continue to build in Houston. In April, 53 projects were underway, totaling 18.5 million square feet. Some 2.5 million square feet has already delivered this year, following a banner 2020, when more than 19 million square feet came online in the metro.
Houston’s biggest industrial development underway, located at 31207 Kingsland Blvd. in Brookshire, is a 2.2 million-square-foot build-to-suit project for Ross Stores. Hunt Southwest Real Estate Development is the developer, and completion is anticipated in late 2021.
1. Dallas-Fort Worth
The Dallas-Fort Worth metro had the highest amount of industrial projects under construction in April: The 75 projects underway will add 29.3 million square feet to the market’s inventory. As the Metroplex has continued to attract residents and draw corporate relocations, industrial demand—particularly for e-commerce users—has skyrocketed. The market’s vacancy rate stood at 4.7 percent in March, underscoring the necessity of new supply.
Sunrider International’s 1.1 million-square-foot manufacturing facility in Midlothian, Texas, was one of the largest developments underway in April. The $44 million two-building project broke ground earlier this year, and delivery is anticipated by mid-2022. Midlothian Economic Development Corp. is financing construction.