TR_December_2021

Detroit prices contracting by 1.8 per- cent. Cincinnati saw the largest price growth in the Midwest with 3 percent.

VACANCIES STAY LOW IN TRANSPORTATION HUBS, 500MSF OF INDUSTRIAL

STOCK UNDER CONSTRUCTION Vacancy rates were also pushed down by growing demand in high-volume transportation hubs, with Inland Empire boasting the low - est vacancy rate—a mere 1.2 percent in August. Neighboring Los Angeles and Orange County, CA saw vacan- cies rest at 3.2 percent and 3.5 per- cent, respectively, while the figure was 3.6 percent in New Jersey. Not to be outdone, some inland hubs also had vacancy figures below the national average of 5.9 per- cent, including Columbus, OH, at 2.5 percent and Indianapolis at 2.7 percent. However, despite having similar vacancy and absorption rates to coastal markets, many industrial and transportation hubs did not see large rent increases, thanks to a new supply of industrial properties. Spe- cifically, Columbus rents increased by only 1 percent during the last 12 months, while that figure was 2.3 percent in Indianapolis. Currently, more than 500 million square feet of industrial space is under construction nationwide— amounting to 3.2 percent of the cur- rent stock—while another 509 million square feet is in the planning stages. It’s worth noting that these figures are historically high for an industrial real estate market that’s hard-pressed for more supply. Simultaneously, the record amounts of stock in the pipeline may not fill the demand gap, as it’s more skewed toward inland markets with more developable space than dense coastal markets, where new industrial space is scarcer. For instance, Dallas-Fort Worth has the most industrial stock under

construction at 34.1 million square feet—4.2 percent of the market’s total. Phoenix is next with 25.5 mil- lion, which represents 9.6 percent of current industrial stock. To the west, Inland Empire has 22 million square feet of industrial stock in the pipeline—3.8 percent of its current inventory—although that may still not be enough to compensate for the con- stant demand. Nearby, Los Angeles and Orange County, Calif., have indus- trial space in the pipeline that’s only equivalent to 1.2 percent of their cur- rent stock, which may translate into further spikes in average rent costs. TESLA & AMAZON POISED TO DELIVER Q4 2021’S LARGEST INDUSTRIAL PROPERTIES Several high-profile industrial properties are scheduled to be com- pleted in the final quarter of 2021: The 15 largest industrial prop- erties scheduled for a Q4 comple- tion illustrate the same trend in the industrial market as the largest completions in the first half of the year: Most of these properties are owner-occupied or single tenant,

being purpose-built with online retail in mind. One notable exception to this trend is the #1 entry—electric vehicle (EV) maker Tesla’s new factory in Aus- tin, Texas, which they’ve dubbed the Gigafactory or Giga Texas. The prop- erty will span a reported 4 million square feet, although that estimate may increase upon its scheduled December completion. This makes the new factory the largest auto- motive plant in the U.S. and a close contestant for the title of the largest industrial completion of the year, competing with Amazon’s new, 4-million-square-foot distribution facility in Colorado Springs, CO. Tes- la hopes to begin production at Giga Texas in early 2022, with the property playing a major role in the company’s efforts in the growing EV market. As expected, Amazon is behind the four next-largest projects in the pipeline for Q4. The largest of these is expected to be a 3.8-million- square-foot distribution and logis- tics center in metro Austin at 2000 East Pecan St., around 23 miles from Tesla’s Gigafactory. Amazon is also

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