CSCMP's Supply Chain Quarterly
September 16, 2019
Forward Thinking

CBRE: Logistics real estate market booming in 14 small markets

Regions offer growth opportunities outside major gateways, firm says.

The industrial and logistics real estate market is booming not only in major gateways but also in smaller "strategic markets" outside those primary regions, according to a report released today by real estate services and investment firm CBRE Group Inc. 

In its study, CBRE named 14 U.S. markets that stand out as options for investors seeking growth opportunities in industrial and logistics real estate.

Leading these strategic markets are: Las Vegas, Salt Lake City, Milwaukee, Reno, St. Louis, El Paso, and Detroit. Those seven locations report industrial vacancy rates below or only slightly above the 4.3 percent national average and have had aggregate rent growth of 6.1 percent in the past year, CBRE said.

The next seven spots are: Greenville-Spartanburg, S.C.; Dayton, Ohio; San Antonio; Savannah, Ga.; Central Valley, Calif.; Northeastern Pennsylvania; and Phoenix. Those regions have more new leasing opportunities due to construction completions, and they generated an average rent increase of 5.6 percent.

Together, the 14 areas have registered demand for industrial and logistics real estate that has outpaced their supply by a collective 89 million square feet since 2013, CBRE said. In the same span, their industrial rents have increased by an average of 25.2 percent.

"The industrial and logistics sector continues to generate strong momentum with the growth of e-commerce and a healthy U.S. economy, but opportunities vary depending on geography, asset type, and other factors," Jack Fraker, vice chairman and managing director of CBRE Global Industrial & Logistics, said in a release. "Investors seeking higher yields can find them in several markets still hitting their stride as hubs. These markets offer the infrastructure, labor availability, connectivity to major ports, and the real estate fundamentals needed to support strong growth going forward."

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