These Are The Top Buy, Sell Markets For Industrial Real Estate As Of Q3
The US industrial market continues to see record occupancy gains and shrinking availability as of Q3.
In a recent report, online real estate marketplace Ten-X foresees continuing healthy growth in the sector due to the profusion of distributions centers linked to the growth of e-commerce and the expansion of warehouses needed for cloud computing facilities. On the other hand, certain markets that are heavily dependent on the energy sector are struggling to maintain demand.
“The industrial sector has been a major beneficiary of a lot of sector tech changes going on,” Ten-X senior quantitative strategist Chris Muoio tells Bisnow. “The rise of e-commerce in particular has shifted demand from what used to be a retail space into distribution space outside core markets. It’s helping Los Angeles and Atlanta on the buy side, and keeping Houston and Dallas from turning negative during this oil downturn.”
After analyzing fundamentals in 48 top industrial markets in the country, Ten-X reported the top five markets to purchase or sell industrial real estate as of Q3.
Top Five Buy Markets
Though economic conditions in the top buy markets differ, each city is benefiting from growing demand in the sector, posting robust absorption rates that will likely exceed supply over the next few years, Ten-X reports.
“The SoCal side is benefiting from increased trade from the Port of LA—it’s driving demand for warehouse space in an already tight market. Now the other three are all in the Southeast—these are robustly growing metro economies that are driving really strong demand for distribution space right outside of these markets, and it’s really lowering vacancies,” Chris tells us.
Nashville, TN
2015 Rents: $3.41/SF
2020 Forecast: $3.91/SF
Los Angeles
2015 Rents: $6.10/SF
2020 Forecast: $6.75/SF
Memphis, TN
2015 Rents: $2.52/SF
2020 Forecast: $2.68/SF
San Bernardino, CA
2015 Rents: $4.45/SF
2020 Forecast: $4.98/SF
Atlanta
2015 Rents: $3.77/SF
2020 Forecast: $4.03/SF
Top Five Sell Markets
You’ll note that four of the top five sell markets are within Texas. These markets that are heavily dependent on the energy industries are struggling as oil prices continue to slump—hitting these local economies particularly hard. Industrial investors in these five metros might consider selling their properties, Ten-X reports.
“The real story with Texas is the combo of a lot of supply and the downturn in demand due to the low oil prices,” Chris says. It's caused absorption to slow in these markets. “This has resulted in higher and more stagnant vacancy, which in turn is stunting rent growth.”
Houston
2015 Rents: $4.10/SF
2020 Forecast: $4.17/SF
Dallas
2015 Rents: $3.76/SF
2020 Forecast: $3.88/SF
Fort Worth, TX
2015 Rents: $3.43/SF
2020 Forecast: $3.63/SF
Suburban MD
2015 Rents: $7.33/SF
2020 Forecast: $7.87/SF
San Antonio, TX
2015 Rents: $4.16/SF
2020 Forecast: $4.38/SF
