Real Estate Opportunities In New Markets
Salt Lake City–Fourteen US markets, including Salt Lake City, stand out in a new report from CBRE as strategic options for investors in industrial & logistics real estate who are seeking growth opportunities outside of primary markets.
These markets, which CBRE describes as strategic markets, have registered demand for industrial & logistics real estate that outpaced their supply by a collective 89 million sq. ft. since 2013. In the same span, their industrial rents have increased by an average of 25.2 percent. Salt Lake City is included on the list as one of the markets posting lower-than-average vacancy rates and high aggregate rent growth.
“For several years now, Salt Lake’s increase in demand has been fueled by many factors: the size of the users is constantly increasing, as well as the number of users in the 100,000-square-foot plus range; the market is fueled by e-commerce, third party logistics, life sciences, construction supply and more—we have a truly diverse economy which leads to a truly diverse tenant mix; and on top of all of that, Salt Lake City is strategically located at the crossroads of I-15 and I-80, right in the center of the intermountain region. All of these influences have contributed to our strong growth in the industrial and logistics sector,” commented Jeff Richards, Senior Vice President and local Industrial & Logistics specialist.
Leading these strategic markets are seven that report industrial vacancy rates below or only slightly above the national average (4.3 percent) and aggregate rent growth of 6.1 percent in the past year: Las Vegas, Salt Lake City, Milwaukee, Reno, St. Louis, El Paso and Detroit. The other seven have more new leasing opportunities due to construction completions, and they generated an average rent increase of 5.6 percent: Greenville-Spartanburg, S.C.; Dayton, Ohio; San Antonio; Savannah, Ga.; Central Valley, Calif.; Northeastern Pennsylvania; and Phoenix.
CBRE selected these strategic markets after polling its Industrial & Logistics Capital Markets teams about which markets represent emerging opportunities and opportunities for yield for investors. Some, like Detroit and Phoenix, are primary markets in terms of population but still are coming into their own as hubs of industrial & logistics real estate.
“The Industrial & 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,” said Jack Fraker, Vice Chairman and Managing Director of CBRE Global Industrial & Logistics. “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.”
CBRE’s report includes details on each of the 14 markets, such as the friendly business climate of Reno, the relatively affordable labor and business costs of Greenville-Spartanburg, and the proposed, 20,000-acre inland port adjacent to Salt Lake City. To read the report, click here.