North America Report
Industrial Logistics & Transportation Solutions | 2017 Midyear Review and Outlook

Big-Box   Market Report

As e-commerce has grown rapidly, the location and functionality of distribution centers have become even more integral in supply chain operations. As a result, large “big-box” distribution centers with enhanced amenities have sprung up over the past decade in core regional markets such as Chicago, the Inland Empire, Dallas, Northern-Central New Jersey, Eastern Pennsylvania-Southern New Jersey, Atlanta and Toronto.

But in the past two years, the rising importance of next-day and same-day delivery has also created an explosion in demand for big-box product in secondary markets, especially near large population centers and logistics hubs like seaports, inland ports and air cargo ports.

In this new interactive report, we examine the strength of the North American big-box industrial market during the first half of 2017 as well as trends in seven core North American big-box markets — and for the first time, we also look at trends in seven growing secondary markets.

Unless otherwise specified, all report data is for 1H 2017 (as of June 30, 2017).

What constitutes a big-box building?

  • 200,000 SF or larger industrial building
  • Primarily used for distribution
  • Ceilings heights of 28' clear or greater
  • Pre-cast or tilt-up concrete construction

Industrial Services and Research

Pete Quinn, SIOR
National Director, Industrial Services | USA
+1
317 713 2107
pete.quinn@colliers.com

James Breeze
National Director of Industrial Research | USA
+1 909 937 6365
james.breeze@colliers.com

Jack Rosenberg, SIOR
National Director | Logistics and Transportation
+1 847 698 8208
jack.rosenberg@colliers.com

North America Overview

Overall, the North American big-box market is riding a wave set by strong fundamentals in 2016, a year that saw all-time records in every statistic tracked. While this pace of activity seemed impossible to sustain, leasing activity and net absorption for the first half of 2017 are near the pace of the same period in 2016.

Activity continues to be dominated by Amazon.com, which leased five buildings totaling 4.1 million square feet during the first half of 2017 in the 14 markets highlighted in this report. Big-box vacancy rates finished midyear 2017 at an all-time low of 6.2%, while asking rents and under-construction product levels rose to new all-time highs.

On the investment side, capitalization rates remained at a record-low 5% in the first half of the year. While demand for big-box product remains strong in core markets, the decreased amount of product to purchase in these markets has pushed investors into secondary markets, where fundamentals are improving.

There are headwinds to look out for in the second half of the year, however, including an increase in demand for smaller warehouses close to urban centers that might reduce big-box demand. This trend of “lean warehousing” is on the rise as occupiers lease multiple buildings of 50,000 square feet to 200,000 square feet in order to focus on particular products and increase delivery speed to the end consumer.

This shift could ultimately lower demand for big-box buildings, particularly those under 750,000 square feet — though demand for this product remains robust for now. In addition, an overall shortage of big-box supply in Toronto and the West Coast and Northeast regions of the United States — where vacancy rates were under 5% in the first half of 2017 — could reduce leasing activity in the coming quarters.

Yet the big-box sector seems poised for continued growth: The North American economies remain strong, e-commerce continues to grow at a faster rate than traditional in-store retail and ports throughout North America continue to post growing inbound container volumes. These drivers should outweigh the headwinds and create strong demand and rental rate growth in big-box markets for the foreseeable future. 

Big-Box Key Statistics

*Average NNN taking rent for the first year of a lease transaction.

Historical Data

Big-Box Buildings in North America
# of Buildings Existing Inventory (SF) Vacant Inventory (SF) Vacancy Rate Leasing Activity (SF) Net Absorption (SF) Taking Rent (PSF/YR)* Capitalization Rate Under Construction (SF) Construction Completions (SF)
2009
3,278 1,422,949,849 193,792,907 13.6% 64,872,054 11,137,540 $3.46 8.1% 7,683,086 32,813,026
2010
3,416 1,478,469,137 171,801,463 11.6% 71,840,324 37,534,929 $3.49 6.5% 8,482,426 6,640,710
2011
3,443 1,495,465,482 131,768,055 8.8% 90,178,573 58,619,910 $3.48 7.0% 12,616,620 13,009,474
2012
3,501 1,525,894,894 119,344,713 7.8% 94,595,309 30,291,425 $3.69 7.0% 34,199,532 18,534,676
2013
3,601 1,585,368,788 113,239,171 7.1% 105,302,773 57,416,416 $3.72 6.5% 63,890,872 42,932,005
2014
3,720 1,663,172,784 112,361,374 6.8% 112,175,456 76,418,676 $3.83 5.8% 89,124,253 80,938,036
2015
3,917 1,769,401,738 116,452,635 6.6% 125,799,318 96,242,714 $4.05 5.3% 100,401,667 103,859,025
2016
4,169 1,890,309,200 122,478,578 6.5% 152,418,374 113,283,076 $4.39 5.0% 106,708,334 123,841,388
1H 2017
4,276 1,948,234,728 121,486,224 6.2% 70,952,550 52,489,148 $4.40 5.0% 107,747,940 54,627,872

*Average NNN taking rent for the first year of a lease transaction.

 
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Atlanta, GA

In 2016, the Atlanta big-box market saw more than 22 million square feet of new leasing and 11 million square feet of net absorption. As of midyear 2017, Atlanta is on pace to match or even surpass this strong level of activity.

At midyear, 7.4 million square feet of big-box space have been absorbed, which is 6% higher than at the same time last year. The record amount of activity over the past six quarters has kept development high, with 13.3 million square feet under construction — nearly 11% higher than at midyear 2016. Investor demand remains strong with many large-scale transactions closing, including purchases by TA Realty, Clarion Partners and American Realty Advisors. Due to this demand, capitalization rates for big-box product dropped to 5.5%, which is the lowest rate on record for the market.

Atlanta has the necessary factors for continued robust fundamentals. Its central location in the southeast U.S. provides access to 28 million people within 250 miles. Along with growing inland logistics capabilities, these factors will be a boon for the market. In the coming quarters, it is expected that net absorption will remain positive, vacancy rates will decline, capitalization rates will remain low and taking rents will continue to increase.

"Atlanta continues to be one of the most active big-box markets in the country. Atlanta’s location, interstate system, healthy employment and proximity to the Port of Savannah continue to draw major occupiers and landlords to the region. Development has been very smart during this cycle, which has helped push our capitalization rates to all-time lows, and we don’t see this changing anytime soon. Availabilities for buildings over 500,000 square feet has tightened dramatically, with few existing options on the market.” 

— Darren Ross, SIOR Senior Vice President | Atlanta

Big-Box Building Inventory

Major Logistics Drivers

One of Atlanta’s many logistics advantages is its close proximity to the Port of Savannah, the fourth-largest seaport in North America and the second-largest on the East Coast. The Port of Savannah is home to the Garden City Terminal — the largest single terminal in the U.S., which operates two Class I rail yards. Some of the largest industrial markets in the U.S., including Atlanta, are within just a four-hour drive from the Port of Savannah.

In 2018, the region will also be home to the Appalachian Regional PortThe new inland port will be located in nearby Chatsworth, GA and offer direct rail service from the Port of Savannah’s Garden City Terminal, significantly lowering truck traffic through the Atlanta area.

Notable Transactions

Big-Box Leases
Tenant Lease Size (SF) Building Address Submarket Lease Type
Owens Corning
1,044,288 8095 McLarin Rd. Palmetto Direct/Renewal
Lindt
1,004,400 Lambert Farms-King Mill Rd. McDonough Direct/New
Uline
1,000,821 705 Braselton Industrial Blvd. Braselton Direct/New
Duracell
873,800 5000 Bohannon Rd. Fairburn Direct/New
Big-Box Sales
Buyer Building Size (SF) Building Address Submarket Sale Type Sale Price (PSF)
TA Realty
873,800 5000 Bohannon Rd. Fairburn Investment $70.95
Clarion Partners
1,044,288 8095 McLarin Rd. Palmetto Investment $52.43
American Realty Advisors
846,496 130 Distribution Dr. McDonough Investment $56.67
Pure Industrial Real Estate Trust (PIRET)
800,000 201 Greenwood Ct. McDonough Investment $49.38

Big-Box Key Statistics

*Average NNN taking rent for the first year of a lease transaction.

Historical Data

Big-Box Buildings in Atlanta
# of Buildings Existing Inventory (SF) Vacant Inventory (SF) Vacancy Rate Leasing Activity (SF) Net Absorption (SF) Taking Rent (PSF/YR)* Capitalization Rate Under Construction (SF) Construction Completions (SF)
2009
283 123,350,723 22,978,235 18.6% 10,103,626 857,406 $2.85 8.4% 3,577,633 1,216,162
2010
285 125,778,356 23,631,068 18.8% 8,955,194 1,774,800 $2.71 8.5% 2,041,229 2,427,633
2011
288 127,819,585 19,278,938 15.1% 11,021,190 6,393,359 $2.77 7.8% 1,115,640 2,041,229
2012
290 128,935,225 19,067,571 14.8% 16,517,787 1,327,007 $2.73 7.6% 2,710,901 1,115,640
2013
294 131,646,126 18,327,181 13.9% 17,834,833 3,451,291 $2.85 6.9% 2,195,278 2,710,901
2014
301 135,695,694 11,471,413 8.5% 22,346,131 10,905,336 $2.99 6.8% 9,890,390 4,049,568
2015
316 145,721,719 12,466,626 8.6% 14,529,315 9,030,812 $3.21 5.9% 13,755,015 10,026,025
2016
349 163,996,953 19,271,413 11.8% 22,560,402 11,470,447 $3.41 6.1% 15,017,194 18,275,234
1H 2017
362 170,940,951 18,817,679 11.0% 10,763,332 7,397,732 $3.49 5.5% 13,133,881 6,943,998

*Average NNN taking rent for the first year of a lease transaction.

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Chicago, IL

With its multitude of logistics advantages and more than 37 million people residing within 250 miles, Chicago remains one of the most in-demand big-box markets in North America. Because of this demand, a variety of speculative construction projects were completed in the first half of 2017, raising the overall vacancy rate to 7.7% — 40 basis points higher than the same time last year. Despite higher vacancy rates, net absorption finished midyear at 8.5 million square feet — up 16% compared to midyear 2016.

Even with an increased vacancy rate, product under construction in the region is strong at more than 12 million square feet. A majority of this product (8 million square feet) is in the size range that is most needed: 750,000 square feet and greater. Vacancy rates remain low for product over 750,000 square feet, finishing midyear at 2.1% — significantly lower than the 4.4% vacancy rate posted at the same time last year.

With e-commerce sales on the rise, Chicago’s advantageous location will remain of vital importance for occupiers, keeping demand strong for big-box product of all size ranges for the foreseeable future.

"The greater Chicago metropolitan area is one of the top five industrial distribution markets in the United States. This is thanks to Chicago’s central location in the U.S. and its convenient position at the southern end of Lake Michigan, as well as the tremendous supply of railroad service. The rapid growth of e-commerce sales and distribution has made Chicago an extremely dynamic market with record leasing and development activity. In particular, one of the major drivers of leasing in Chicago has been the supply chain re-engineering that most consumer product companies and retail chains are doing.

— Jack Rosenberg, SIOR National Director | Logistics & Transportation Solutions

Big-Box Building Inventory

Major Logistics Drivers

Chicago is the major rail center of the United States. Six of the seven major rail lines have hubs in the Greater Chicago area, which is a major reason the region is one of the largest big-box industrial markets in the country. The region claims 70% of the nation’s rail and intermodal activity.

Yet rail is not the only logistics advantage the region provides. Three of the nation’s busiest transcontinental expressways cross through the region. In addition, the Chicago Air Gateway comprises O’Hare International Airport and the Midway Airport. Consistently recognized as one of the busiest airports in the world, Chicago O'Hare International Airport is not only a national aviation hub, it is also a global air cargo gateway, providing billions of dollars in trade to Chicago's economy.

Notable Transactions

Big-Box Leases
Tenant Lease Size (SF) Building Address Submarket Lease Type
M. Block & Sons, Inc.
915,643 18801 Oak Park Ave. Tinley Park Direct/Renewal
Mondelez International, Inc.
806,400 100 Prologis Pkwy. Morris Direct/Renewal
Kimberly-Clark Corporation
716,318 1401-1465 W. Normantown Rd. Romeoville Direct/Renewal
CTDI, Inc.
501,313 3900 Brandon Rd. Joliet Direct/New
Big-Box Sales
Buyer Building Size (SF) Building Address Submarket Sale Type Sale Price (PSF)
Ares Commercial Real Estate Management
718,709 25850 S. Ridgeland Ave. Monee Investment $47.03
TA Realty
615,000 1500 Remington Blvd. Bolingbrook Investment $90.02
Duke Realty Corporation
502,330 16328 & 16410 S. John Lane Crossing Lockport Two-property Investment $88.32
Greco and Sons, Inc.
309,120 1340 Brewster Creek Blvd. Bartlett Owner/User $56.61

Big-Box Key Statistics

*Average NNN taking rent for the first year of a lease transaction.

Historical Data

Big-Box Buildings in Chicago
# of Buildings Existing Inventory (SF) Vacant Inventory (SF) Vacancy Rate Leasing Activity (SF) Net Absorption (SF) Taking Rent (PSF/YR)* Capitalization Rate Under Construction (SF) Construction Completions (SF)
2009
402 174,896,238 28,333,191 16.2% 8,770,405 2,840,661 $3.69 6.2% - 5,309,160
2010
406 174,896,238 24,310,577 13.9% 9,876,554 4,022,613 $3.47 6.5% 1,350,000 -
2011
407 176,246,238 17,977,116 10.2% 11,496,182 7,683,461 $3.61 7.0% 627,100 1,350,000
2012
410 177,111,981 15,762,966 8.9% 13,372,315 3,079,893 $3.98 7.0% 4,026,851 865,743
2013
418 183,433,259 15,591,827 8.5% 15,967,560 6,492,417 $4.10 6.5% 4,307,145 6,321,278
2014
437 191,107,885 13,759,768 7.2% 12,902,662 9,506,685 $4.43 5.8% 8,801,182 7,674,626
2015
477 207,187,079 14,710,283 7.1% 16,248,184 15,128,679 $4.46 5.3% 11,037,540 16,079,194
2016
518 224,730,700 16,180,610 7.2% 14,390,831 16,073,293 $4.49 5.0% 14,652,241 17,543,621
1H 2017
538 235,226,472 18,139,250 7.7% 6,873,240 8,537,132 $4.54 5.0% 12,137,354 10,495,772

*Average NNN taking rent for the first year of a lease transaction.

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Cincinnati, OH

Cincinnati is becoming an e-commerce destination due to its central location, large workforce, excellent transportation advantages and a population of approximately 40 million people within 250 miles. The Cincinnati market is particularly well-suited to meet the growing need for faster delivery and the accompanying demand for warehousing and transportation.

Demand from e-commerce companies has dropped industrial big-box vacancies to all-time lows and increased new development. At midyear, more than 3.2 million square feet had leased, close to the 3.4 million square feet leased in all of 2016. The significant amount of leasing activity increased net absorption to 2.7 million square feet at midyear, nearly double the net absorption at the same time last year.

The exceptional activity is pushing up taking rents, which finished midyear at a decade-high $3.78 per square foot per year. Demand has also driven up new development with 1.3 million square feet completed and another 3.4 million square feet under construction. With superb logistics advantages and the new Amazon Prime Air hub, robust activity is expected to continue to make Cincinnati one of the top big-box markets to watch in the coming quarters.

"Demand for modern Class A bulk warehouse space continues to outpace supply in the Cincinnati market. With new supply at a 10-year high, the vacancy rate remains at a historic low. We expect to see this trend continue through the remainder of this year and into 2018. E-commerce is a key industrial driver and online sales still represent only a fraction of total retail sales — so there’s a lot of head room for growth in the logistics sector going forward.

— John Gartner, SIOR Senior Vice President | Cincinnati

Big-Box Building Inventory

Major Logistics Drivers

As the busiest airport in Kentucky and the second-busiest serving a metro area in Ohio, the Cincinnati/Northern Kentucky International Airport is consistently ranked among the world’s most successful cargo airports. It is also considered the fastest-growing cargo airport in North America, as cargo volume has risen by more than 50% since 2011.


The Amazon Prime Air hub located at the airport will be a major boon to an already strong e-commerce market. When fully functional, the hub will employ 2,000 full-time employees as Amazon looks to expand its Prime Air capabilities.

Notable Transactions

Big-Box Leases
Tenant Lease Size (SF) Building Address Submarket Lease Type
Hayneedle.com
994,013 600 Gateway Blvd. Monroe, OH Direct/New
Amazon
646,912 2305 Litton Ln. Hebron, KY Direct/New
UPS
442,304 55 Transport Dr. Walton, KY Direct/New
Dawson Logistics
312,420 4350 Port Union Rd. West Chester, OH Direct/New
Big-Box Sales
Buyer Building Size (SF) Building Address Submarket Sale Type Sale Price (PSF)
The Kroger Co.
674,500 251 Mt. Zion Rd. Independence, KY Owner/User $50.13
Gramercy Property Trust
603,586 20 Logistics Blvd. Walton, KY Investment $49.70
STAG Industrial
570,000 2395 E. National Rd. Vandalia, OH Investment $52.19
Gramercy Property Trust
479,512 8754 Trade Port Dr. Hamilton, OH Investment $42.19

Big-Box Key Statistics

*Average NNN taking rent for the first year of a lease transaction.

Historical Data

Big-Box Buildings in Cincinnati
# of Buildings Existing Inventory (SF) Vacant Inventory (SF) Vacancy Rate Leasing Activity (SF) Net Absorption (SF) Taking Rent (PSF/YR)* Capitalization Rate Under Construction (SF) Construction Completions (SF)
2009
125 48,106,385 6,687,322 13.9% - -1,750,895 $2.77 10.4% - 870,135
2010
125 48,106,385 5,641,802 11.7% - 1,045,520 $2.93 9.0% 366,096 -
2011
126 48,909,185 6,368,636 13.0% 3,013,872 -726,834 $2.88 8.1% 930,588 802,800
2012
128 49,111,185 5,509,099 11.2% 2,279,043 1,061,537 $2.77 8.0% 1,227,046 1,072,046
2013
131 50,169,056 4,143,516 8.3% 5,358,153 2,423,454 $3.05 7.2% 1,789,500 1,150,000
2014
133 51,394,043 2,662,329 5.2% 3,007,563 3,144,497 $2.81 7.2% 2,156,220 1,808,164
2015
137 53,623,657 3,179,593 5.9% 1,956,168 1,809,123 $3.36 6.9% 2,110,587 2,931,375
2016
143 57,289,504 4,191,432 7.3% 3,444,246 2,654,038 $3.67 7.0% 2,214,973 3,665,877
1H 2017
145 58,088,064 2,221,274 3.8% 3,267,878 2,749,618 $3.75 - 3,415,443 1,300,220

*Average NNN taking rent for the first year of a lease transaction.

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Columbus, OH

At the end of 2016, the Columbus big-box market was on a roll with robust leasing activity, lower vacancy rates and record-breaking net absorption. By comparison, the first half of 2017 has been disappointing. Low leasing and a few large move-outs created just under 400,000 square feet of negative net absorption, with vacancy rates rising to 8.8%.

The good news for the market is that the slowdown in fundamentals is likely temporary. Leasing activity is expected to take off in the second half of 2017, with many large deals nearing completion. In fact, the number of deals in the pipeline is higher than the total amount of activity during the first half of 2017.

Developers are bullish about the Columbus industrial market, with nearly 3 million square feet under construction — the most in more than a decade. Factors driving development include a booming inland port and a growing population base of nearly 36 million people within 250 miles of Columbus. In the coming quarters, look for leasing activity to significantly increase, pushing net absorption back into the positive column and lowering the overall vacancy rate.

"The Columbus market anticipates continued growth as a primary distribution hub. Conveniently located at the crossroads of I-70 and I-71, the market enables access to half of the U.S. population within an eight-hour drive. In addition, the availability of large tracts of developable land make the region attractive for logistics providers and retailers. The main demand generator has been the e-commerce sector, along with third-party logistics providers in the west, east and southeast submarkets.

— Michael Linder, SIOR Executive Vice President & Principal | Columbus

Big-Box Building Inventory

Major Logistics Drivers

The Rickenbacker Inland Port serves as a hub for importing and exporting freight via air and rail, positioning Columbus to take advantage of future increases in shipping to East Coast ports driven by the expansion of the Panama Canal. The majority of rail freight traveling to Columbus is international and reaches the Ohio Valley via the East Coast and West Coast ocean ports.


The port is serviced by Norfolk Southern and CSX. The Norfolk Southern Rickenbacker Intermodal Terminal, which covers 175 acres and can handle more than 400,000 containers annually, is located in the heart of the facility. The land development within the port has the capacity to grow to 70 million square feet of industrial space.

Notable Transactions

Big-Box Leases
Tenant Lease Size (SF) Building Address Submarket Lease Type
Continental Tire
417,125 2190 Creekside Pkwy. Lockbourne Expansion
JobsOhio Beverage System
314,092 6100-6250 Opus Dr. Groveport Direct/New
Art.com
216,000 4000 Creekside Pkwy. Lockbourne Direct/Renewal
Big-Box Sales
Buyer Building Size (SF) Building Address Submarket Sale Type Sale Price (PSF)
Prologis
1,014,592 5330 Crosswinds Dr. Columbus Investment $23.41
Sealy & Company
652,195 2450 Creekside Pkwy. Lockbourne Investment $61.02
Exel Logistics Co
652,195 2450 Creekside Pkwy. Lockbourne Investment $53.00
DRA Advisors LLC
530,000 7070 Pontius Rd. Groveport Investment $47.43

Big-Box Key Statistics

*Average NNN taking rent for the first year of a lease transaction.

Historical Data

Big-Box Buildings in Columbus
# of Buildings Existing Inventory (SF) Vacant Inventory (SF) Vacancy Rate Leasing Activity (SF) Net Absorption (SF) Taking Rent (PSF/YR)* Capitalization Rate Under Construction (SF) Construction Completions (SF)
2009
- - - - 1,499,998 - - - - -
2010
121 47,949,704 6,079,920 12.7% 1,139,456 888,444 $2.74 7.8% - -
2011
121 47,949,704 5,688,727 11.9% 3,606,575 274,167 $2.74 7.9% 543,000 654,966
2012
121 48,604,670 4,034,756 8.3% 1,764,452 1,785,907 $3.06 7.6% 1,233,303 -
2013
121 48,178,552 2,239,546 4.7% 3,746,103 2,667,572 $3.03 7.4% 1,820,000 -
2014
102 51,400,040 2,003,869 3.9% 3,265,739 1,038,129 $3.23 7.1% 2,158,755 717,396
2015
110 55,200,883 4,574,373 8.3% 2,489,383 940,511 $3.26 6.9% 960,490 1,273,250
2016
113 56,728,373 3,966,984 7.0% 2,484,256 3,564,790 $3.22 7.0% 264,000 567,000
1H 2017
114 56,992,373 5,413,545 8.8% 945,307 -356,701 $3.10 7.9% 2,857,314 264,000

*Average NNN taking rent for the first year of a lease transaction.

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Dallas-Fort Worth, TX

Dallas-Fort Worth’s location, abundance of land and strong labor force make it one of the fastest-growing big-box markets in the country. As of midyear 2017, more than 17 million square feet of big-box product were under construction in the region, second only to the Inland Empire within North America. Due to substantial occupier demand, development remains robust despite a vacancy rate of 10.1% — the highest for a major big-box market in North America.

Leasing activity is strong in the region, finishing the first half of 2017 at more than 3.5 million square feet, which is on track with leasing in 2016. Net absorption also remains positive, finishing midyear at 6.6 million square feet and putting the big-box market on pace for its third consecutive year of net absorption over 10 million square feet.

There are plenty of reasons for optimism for the Dallas-Fort Worth big-box market in the second half of 2017. The population is growing, with more than 26 million people within 250 miles of the core. Corporations continue to move their headquarters into the region at a swift pace, attracting new consumers. With Dallas’ economic prowess and rising population, big-box activity will likely remain strong and absorb much of the new development in the region in the coming quarters.

"Dallas-Fort Worth (DFW) is a key hub for distribution, which is evident in the number of big-box distribution centers larger than 1 million square feet opened in the past five years by companies new to the area. In the past, DFW was mainly served by containers coming through the ports of Los Angeles and Long Beach. As more container ships are calling on East Coast ports, DFW’s central location and access to both coasts will give distributors more flexibility. 

In addition, e-commerce operations depend on the DFW market, especially as the nearby population is increasing by more than 130,000 people per year and FedEx and UPS are expanding their presences here. DFW will continue to be valued for its business-friendly environment, quality of workforce, lack of state income tax, convenient access to major interstate freeways, temperate climate and diversity of economy.

— Chris Teesdale, SIOR Executive Vice President | Dallas

Big-Box Building Inventory

Major Logistics Drivers

Dallas-Fort Worth’s central U.S. location enables the market to act as an advantageous distribution hub, with quick access to rail, air and over-the-ground truck transportation. The region is a global inland port with two locations capable of large-scale cargo operations: Alliance Global Logistics Hub and International Inland Port of Dallas (IIPOD)


Home to major rail logistics operations for the two primary western U.S. railroads, BNSF Railway Co. and Union Pacific Corp., Dallas-Fort Worth is able to tap into major east-west arteries and provide important links to Mexican markets. By truck, distributors can efficiently move products throughout the central United States, reaching 93% of the population within 48 hours.

Notable Transactions

Big-Box Leases
Tenant Lease Size (SF) Building Address Submarket Lease Type
S&S Activewear
492,322 4800 N. Sylvania Ave. Fort Worth Direct/New
FedEx
365,000 2251 E. Bardin Rd. DeSoto Direct/New
The Kraft Heinz Company
260,959 2600 McCree Rd. Garland Direct/New
Big-Box Sales
Buyer Building Size (SF) Building Address Submarket Sale Type Sale Price (PSF)
Brennan Investment Group
476,341 1200 E. Centre Park Blvd. DeSoto Investment N/A
Dalfen America Corp
419,626 8901 Forney Rd. Dallas Investment N/A
Monmouth Real Estate Investment Corporation
351,874 5005 Samuell Blvd. Mesquite Investment $143.00
Everflow Supplies Inc.
263,380 2300 E. Bardin Rd. Arlington Owner/User N/A

Big-Box Key Statistics

*Average NNN taking rent for the first year of a lease transaction.

Historical Data

Big-Box Buildings in Dallas-Fort Worth
# of Buildings Existing Inventory (SF) Vacant Inventory (SF) Vacancy Rate Leasing Activity (SF) Net Absorption (SF) Taking Rent (PSF/YR)* Capitalization Rate Under Construction (SF) Construction Completions (SF)
2009
349 148,087,900 29,231,270 19.7% 2,431,516 2,826,245 $3.29 7.8% 400,123 9,084,950
2010
350 148,488,023 27,029,387 18.2% 3,407,676 2,602,006 $3.21 8.0% 1,020,000 400,123
2011
352 149,813,023 20,372,704 13.6% 7,487,056 7,981,683 $3.17 8.0% 951,480 1,325,000
2012
353 150,764,503 15,263,768 10.1% 5,365,234 6,060,416 $3.21 7.4% 3,265,722 951,480
2013
365 157,244,724 12,279,273 7.8% 5,748,456 9,464,716 $3.26 6.3% 12,206,125 6,480,221
2014
389 171,473,647 18,551,093 10.8% 4,420,105 7,957,103 $3.51 6.8% 12,860,657 14,228,923
2015
421 186,284,676 18,997,271 10.2% 8,424,046 14,364,851 $3.59 7.0% 15,427,891 14,811,029
2016
460 202,597,500 17,948,905 8.9% 7,322,535 17,361,190 $3.69 6.0% 17,573,572 16,312,824
1H 2017
478 212,292,740 21,403,998 10.1% 3,510,046 6,654,151 $3.83 6.8% 17,522,376 9,695,240

*Average NNN taking rent for the first year of a lease transaction.

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East Bay-Central Valley, CA

Despite the fact that Northern California is more widely known as a key hub for the tech industry, the East Bay-Central Valley region is becoming a major big-box industrial market. Demand for big-box product has exploded due to the rise of e-commerce, as occupiers scramble to service the growing young population in the area.

But the East Bay-Central Valley region is really a tale of two markets, the first of which is Oakland — a mature market near the Port of Oakland. Vacancy rates remain extremely low in Oakland, with record-high taking rents. Because of land constraints in the Oakland area, big-box development has shifted to the growing Central Valley region, where nearly 70% of the product in development resides. Another key market is Fairfield, where the top four big-box transactions in the region year-to-date have all been signed.

Demand and taking rents continue to ascend in the East Bay-Central Valley region, finishing midyear at $6.20 per square foot per year — the highest big-box taking rent in the United States. As the region continues to grow, big-box product demand will likely increase, leading to continued new development in the Central Valley and redevelopment of older product in the Oakland area.

With a population base of more than 10 million consumers, the Northern California region is ideal for companies seeking to capitalize on the rapid growth of the e-commerce industry. Within Northern California, the East Bay region of the San Francisco Bay Area is the most desirable location for logistics and industrial distribution — particularly the largest city in the East Bay, Oakland. Oakland is a prime area for industrial warehousing buildings, given its proximity to the fifth-busiest container port in the United States.” 

— Greig Lagomarsino, SIOR Executive Vice President | East Bay

Big-Box Building Inventory

Major Logistics Drivers

The East Bay-Central Valley region is home to both the Port of Oakland and the Port of Stockton. The Port of Oakland is a world-class international cargo transportation and distribution hub. Located on the mainland shore of San Francisco Bay, Oakland was among the first ports globally to specialize in the intermodal container operations that have revolutionized international trade and that stimulate the global economy. The Port of Stockton is located in the San Joaquin Valley and is situated near four major freeways and two transcontinental railroads.

Notable Transactions

Big-Box Leases
Tenant Lease Size (SF) Building Address Submarket Lease Type
Zinus
664,000 Prologis International Park Of Commerce, Bldg. 12 Tracy Direct/New
Owens-Illinois Inc.
607,208 5195 Fermi Dr. Fairfield Direct/Renewal
Berlin Packaging
430,500 2920 Cordelia Rd. Fairfield Direct/New
Blue Apron Inc.
430,500 2950 Cordelia Rd. Fairfield Direct/New
Big-Box Sales
Buyer Building Size (SF) Building Address Submarket Sale Type Sale Price (PSF)
Ashley Furniture Industries
518,927 18350 Harlan Rd. Lathrop Owner/User $85.00
Lowenberg Corporation
212,802 2102 Courage Dr. Fairfield Investment $82.24

Big-Box Key Statistics

*Average NNN taking rent for the first year of a lease transaction.

Historical Data

Big-Box Buildings in East Bay-Central Valley
# of Buildings Existing Inventory (SF) Vacant Inventory (SF) Vacancy Rate Leasing Activity (SF) Net Absorption (SF) Taking Rent (PSF/YR)* Capitalization Rate Under Construction (SF) Construction Completions (SF)
2009
122 51,775,712 6,950,932 13.4% 4,380,650 -782,251 $3.70 7.8% - 1,994,893
2010
123 52,063,712 6,500,778 12.5% 1,962,678 450,154 $5.04 7.2% - 288,000
2011
124 53,268,987 5,090,374 9.6% 4,471,644 2,615,679 $4.38 6.9% - -
2012
125 53,611,518 4,273,506 8.0% 4,346,888 1,159,399 $4.77 6.7% 1,017,353 -
2013
126 55,118,967 5,297,632 9.6% 3,011,929 483,323 $4.56 6.0% 945,502 1,017,353
2014
129 56,537,605 4,849,580 8.6% 4,452,200 1,075,152 $4.88 5.0% 3,074,922 1,418,638
2015
133 58,942,408 2,326,234 3.9% 5,239,301 4,104,289 $5.37 8.2% 4,394,847 2,082,238
2016
141 63,502,530 1,922,583 3.0% 3,998,153 3,019,566 $6.24 5.2% 5,263,276 4,560,307
1H 2017
146 66,037,661 3,102,710 4.7% 3,637,486 172,011 $6.20 4.5% 4,703,412 2,535,131

*Average NNN taking rent for the first year of a lease transaction.

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Eastern PA-Southern NJ

At approximately 233 million square feet, the Eastern Pennsylvania-Southern New Jersey market is the second-largest big-box market in North America. With more than 58 million people within 250 miles of its core, a plethora of logistics advantages and an ample amount of developable land (especially in the Lehigh Valley), the market continues to post robust fundamentals. This is evidenced by the more than 10 million square feet of big-box leasing activity in the first half of 2017 — already nearly double the 2016 total and an all-time record for the market over any six-month period.

This record amount of leasing activity was helped by three new leases of more than 1 million square feet signed in the first half of the year. Strong leasing in buildings of more than 750,000 square feet has led to a large amount of development, with more than 8 million square feet under construction in this size range. With economic conditions continuing to improve and the surrounding East Coast ports performing well, big-box fundamentals should remain healthy in the region for the foreseeable future.

The Eastern Pennsylvania-Southern New Jersey-Northern Delaware distribution corridors are thriving, driven by sustained demand for retail, manufacturing and consumer products supply chain operations as well as the area’s growth as a destination for e-commerce fulfillment and last-mile distribution. Year-to-date occupier transactions are at a cycle high, leading to a historic number of construction starts and optimism for growth throughout the regional market.

The market is at the intersection of the major East Coast population centers and offers a multi-modal transportation system with an extensive interstate network (I-95, I-78, I-80, I-81 and I-83), freight rail, air cargo operations and proximity to a five-state port system.” 

— Mark Chubb Senior Managing Director | Conshohocken

Big-Box Building Inventory

Major Logistics Drivers

The Eastern Pennsylvania-Southern New Jersey market is one of the most logistics-friendly markets in the country. The region is centrally located along the U.S. East Coast, giving it the capability to handle container volumes from three major seaports: the Port of New York and New Jersey, the Port of Baltimore and the Port of Philadelphia


Two Class I railroads (CSX and Norfolk Southern) and 100 major interstate interchanges are located within the region. In addition, five international airports with major cargo handling  capabilities are within 90 minutes of the region.

Notable Transactions

Big-Box Leases
Tenant Lease Size (SF) Building Address Submarket Lease Type
Ace Hardware
1,100,001 139 Fredericksburg Rd. Fredericksburg, PA Direct/New
KOHLER
1,029,600 221 Allen Rd. Carlisle, PA Direct/New
Amazon.com, Inc.
1,016,116 2551 Oldmans Creek Rd. Swedesboro, NJ New/Build-to-Suit
B&H Photo Video
577,200 400 Cedar Ln. Florence, NJ Direct/New
Big-Box Sales
Buyer Building Size (SF) Building Address Submarket Sale Type Sale Price (PSF)
Dermody Properties
1,296,494 Capital Logistics Center Middletown, PA Investment $58.70
Exeter Property Group
1,005,200 545 Oak Hill Rd.
4501 Westport Dr.
Mountain Top, PA
Mechanicsburg, PA
Investment $63.21
SuperValu, Inc.
754,711 3700 Industrial Rd. Harrisburg, PA Owner/User $49.10
United Parcel Service (UPS)
595,000 1 Ames Dr. Carlisle, PA Owner/User $92.44

Big-Box Key Statistics

*Average NNN taking rent for the first year of a lease transaction.

Historical Data

Big-Box Buildings in Eastern PA-Southern NJ
# of Buildings Existing Inventory (SF) Vacant Inventory (SF) Vacancy Rate Leasing Activity (SF) Net Absorption (SF) Taking Rent (PSF/YR)* Capitalization Rate Under Construction (SF) Construction Completions (SF)
2009
351 171,095,986 21,205,046 12.4% 7,230,575 354,457 $3.55 - 1,712,000 3,659,781
2010
353 172,140,986 17,047,991 9.9% 882,148 5,202,055 $3.63 - 1,664,946 1,045,000
2011
359 174,779,432 12,756,043 7.3% 1,021,551 6,930,394 $4.01 8.1% 3,823,473 2,638,446
2012
368 181,141,185 16,222,192 9.0% 502,269 2,895,604 $4.04 8.4% 5,019,909 6,361,753
2013
376 185,866,328 12,326,948 6.6% 2,423,248 8,620,387 $4.08 7.6% 7,291,433 4,725,143
2014
388 194,049,729 7,794,760 4.0% 4,096,500 12,715,589 $4.15 6.7% 12,230,479 8,183,401
2015
403 207,126,346 9,985,132 4.8% 4,113,609 10,886,245 $5.04 5.9% 14,384,906 13,076,617
2016
443 228,112,424 12,298,497 5.4% 6,638,719 18,672,713 $5.06 5.9% 5,233,997 20,986,078
1H 2017
450 233,346,421 10,824,262 4.6% 10,169,800 6,708,232 $5.06 5.9% 11,440,272 5,233,997

*Average NNN taking rent for the first year of a lease transaction.

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Houston, TX

While the energy sector continues to impact Houston’s economy and big-box market, the city’s booming population is creating robust demand and increased development in the region. More than 24 million people live within 250 miles of Houston and the city’s population is growing at a rate of 1,000 people per week.

This population growth has increased occupier demand, with more than 4.1 million square feet of net absorption for big-box product at midyear — slightly higher than the net absorption in all of 2016. Occupancy gains lowered the overall vacancy rate to 7.3% at midyear, significantly lower than the 12.8% vacancy rate at midyear 2016 and the lowest big-box vacancy rate in a decade.

Demand for big-box product in Houston will likely continue for the foreseeable future. The Port of Houston is booming with significant growth in both loaded inbound and outbound container volume. This, along with continued population growth, will likely increase leasing activity and taking rental rates in the coming quarters.

Houston is a tale of two big-box markets: consumer goods distributors (including e-commerce) and port-related import and export businesses. The Houston metropolitan region has led the nation in population growth for eight years, and we are seeing increased demand from consumer and durable goods tenants seeking spaces of more than 200,000 square feet. And even with the slowdown in the ‘upstream’ side of the oil and gas economy, the ‘downstream’ end-product side continues to be a robust growth market. 

The east side of Houston has been the strongest submarket, as its proximity to the nation’s largest petrochemical refineries and the Port of Houston make the area appealing to plastic resin packagers. This group has been taking substantial warehouse space in rail-served buildings of up to 500,000 square feet. In addition, we have seen global retailers commit to import distribution centers in the area — which speaks to Houston’s strength as a “third-coast” port that allows access to consumers in the central United States.” 

— Walker Barnett, SIOR Principal | Houston

Big-Box Building Inventory

Major Logistics Drivers

The Port of Houston remains a top demand driver for big-box space in the region. One of the top growth ports for loaded inbound container volumes, the Port of Houston draws on recent infrastructure improvements and two rail yards to funnel product to and from warehouses in the Houston region. Among other factors, the expansion of the Panama Canal should help keep demand strong for industrial product in the market for the foreseeable future.

Notable Transactions

Big-Box Leases
Tenant Lease Size (SF) Building Address Submarket Lease Type
MRC Global
415,272 1801 S. 16th St. La Porte Direct/New
Kuraray America, Inc.
465,851 9802 Fairmont Pkwy. Pasadena Direct/New
Bel Furniture
340,503 28450 West Ten Blvd. Houston Direct/New
Ford Motor Company
250,000 7909 Northcourt Rd. Houston Direct/Renwal
Big-Box Sales
Buyer Building Size (SF) Building Address Submarket Sale Type Sale Price (PSF)
Hines Interests Limited Partnership
900,000 359 Old Underwood Rd. La Porte Investment $71.59
Hines Interests Limited Partnership
710,200 359 Pike Ct. La Porte Investment $71.59
Hines Interests Limited Partnership
225,000 10051 Porter Rd. La Porte Investment $71.59

Big-Box Key Statistics

*Average NNN taking rent for the first year of a lease transaction.

Historical Data

Big-Box Buildings in Houston
# of Buildings Existing Inventory (SF) Vacant Inventory (SF) Vacancy Rate Leasing Activity (SF) Net Absorption (SF) Taking Rent (PSF/YR)* Capitalization Rate Under Construction (SF) Construction Completions (SF)
2009
100 37,267,235 6,963,481 18.7% 3,571,919 1,570,604 $4.26 7.5% 1,057,126 3,284,916
2010
101 38,324,361 5,559,392 14.5% 4,164,787 2,461,215 $4.57 8.1% 507,000 1,057,126
2011
103 38,831,361 4,846,429 12.5% 2,915,823 1,219,963 $4.56 8.3% 1,033,929 507,000
2012
105 39,390,290 3,958,422 10.0% 5,055,883 1,446,936 $4.36 6.0% 1,251,929 558,929
2013
113 42,184,389 4,269,932 10.1% 3,854,212 2,482,589 $4.43 6.5% 2,224,230 2,794,099
2014
121 44,985,651 4,749,224 10.6% 6,126,905 2,321,970 $4.48 5.7% 5,071,685 2,801,262
2015
140 51,639,313 5,414,815 10.5% 8,883,044 5,988,071 $4.67 6.6% 4,841,402 6,653,662
2016
153 55,516,170 5,238,222 9.4% 7,265,266 4,053,450 $4.86 5.8% 4,775,617 3,876,857
1H 2017
161 58,636,787 4,253,955 7.3% 2,083,876 4,104,884 $5.18 6.1% 2,429,485 3,120,617

*Average NNN taking rent for the first year of a lease transaction.

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Indianapolis, IN

Indianapolis’ location affords access to nearly 43 million people within 250 miles. The city also has the advantage of being in a pro-business state with numerous tax and financial incentives. Because of this, Indianapolis has become a burgeoning big-box market, with solid leasing, rental rate growth and new development.

While not at the record levels of 2016, new big-box leasing activity in Indianapolis finished the first half of 2017 at 3.4 million square feet, putting the market on pace for its second-best year of leasing on record. Absorption also remains solid at 2.4 million square feet at midyear. Strong demand for industrial product lowered the overall big-box vacancy rate to 4.1% as of midyear — the lowest vacancy rate in more than a decade for the market and significantly lower than the 10.1% vacancy rate at midyear 2016.

The Indianapolis market is set up for continued growth in the coming quarters. In the first half of the year, more than 2.6 million square feet of completed construction have been added. With an additional 5.4 million square feet under construction, 2017 could be a record-breaking year for big-box development. Demand from occupiers will likely remain strong for the foreseeable future.

The Indianapolis industrial market’s reputation as a distribution and logistics hub continues to grow. Aptly referenced as the “Crossroads of America,” you can reach approximately 75% of the U.S. and Canadian populations in a day’s drive from Indiana’s capital city. The lack of physical boundaries, such as mountains or oceans, allows big-box development to expand as developers continue to find competitive land opportunities and favorable pricing. In addition, Indiana is a “right-to-work” state, which contributes to its business-friendly climate. Indiana also has no toll roads and more highway intersections than any other state, ranking it first in the nation for interstate highway access.” 

— Pete Quinn, SIOR Executive Vice President | Indianapolis

Big-Box Building Inventory

Major Logistics Drivers

With access to five interstates — I-65, I-69, I-70, I-74 and I-465 — and five major railroads, Indianapolis’ central location makes it an ideal logistics hub. This advantageous location is the reason FedEx chose to house its second-largest hub at the Indianapolis International Airport. Located less than 20 minutes from downtown Indianapolis, the Indianapolis International Airport is one of the largest cargo centers in the United States. As a result of its cargo capabilities, the airport generates more than $4.5 billion for the area's economy each year on average.

Notable Transactions

Big-Box Leases
Tenant Lease Size (SF) Building Address Submarket Lease Type
LSC Communications
799,344 700 Airtech Pkwy. Plainfield Direct/Renewal
Guitar Center
773,150 950 E. Northfield Dr. Brownsburg Direct/Renewal
Best Choice Products
702,000 3375 Plainfield Rd. Plainfield Direct/New
Ryder
412,000 760 Commerce Pkwy. E. Dr. Greenwood Direct/New
Big-Box Sales
Buyer Building Size (SF) Building Address Submarket Sale Type Sale Price (PSF)
Sealy & Company
1,093,130 7-building portfolio sale Indianapolis Investment $45.19
DRA Advisors LLC
925,800 800 Perry Rd. Plainfield Investment $44.54
Lexington Realty Trust
741,880 1285 E. SR 32 Lebanon Investment $50.28
Green Meadows Airtech Parkway LLC
293,423 390 Airtech Pkwy. Plainfield Investment $72.42

Big-Box Key Statistics

*Average NNN taking rent for the first year of a lease transaction.

Historical Data

Big-Box Buildings in Indianapolis
# of Buildings Existing Inventory (SF) Vacant Inventory (SF) Vacancy Rate Leasing Activity (SF) Net Absorption (SF) Taking Rent (PSF/YR)* Capitalization Rate Under Construction (SF) Construction Completions (SF)
2009
119 60,554,138 7,539,880 12.5% 1,613,761 2,950,828 $2.54 9.6% 0 3225889
2010
119 61,040,762 7,257,527 11.9% 3,289,528 923,431 $2.48 8.0% 1,049,980 486,624
2011
121 62,746,742 3,569,112 5.7% 4,277,694 5,395,797 $2.68 8.1% 0 1,705,980
2012
123 63,724,446 2,686,876 4.2% 4,398,979 1,859,940 $2.95 8.0% 2,787,558 977,704
2013
129 67,636,134 4,510,426 6.7% 7,679,871 2,088,138 $2.86 7.1% 2,657,271 3,911,688
2014
138 72,665,819 5,801,138 8.0% 5,041,144 3,738,973 $3.38 6.8% 4,155,250 5,029,685
2015
147 78,274,199 10,165,392 13% 5,478,249 1,211,196 $3.10 6.2% 1,735,569 5,608,380
2016
154 81,190,652 5,647,176 7.0% 9,149,081 6,632,492 $3.35 6.2% 5,578,939 2,916,453
1H 2017
159 83,777,065 3,472,508 4.1% 3,369,607 2,372,873 $3.31 7.0% 5,405,936 2,586,413

*Average NNN taking rent for the first year of a lease transaction.

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Inland Empire, CA

At just under 310 million square feet, the Inland Empire big-box market is the largest in North America. With more than 28 million people within 250 miles of its core and a strong labor force, the Inland Empire is a leader for e-commerce distribution. This is evidenced by the more than 7 million square feet that Amazon.com occupies in the region.

Robust demand lowered the overall vacancy rate to 4.3% at midyear, the lowest big-box vacancy rate for the market in a decade. Despite low vacancies, activity remains strong with more than 15 million square feet of leasing activity in the first half of 2017 — the most for a big-box market in North America.

One of the Inland Empire’s top advantages is the amount of land available for development. With demand remaining near all-time highs, more than 19 million square feet of big-box space were under construction at midyear. These factors should keep activity robust, investor interest high and capitalization rates well below 5% in the region in the coming quarters.

The Inland Empire continues to be the healthiest and most dynamic industrial big-box market in the country. In addition to the historical market drivers like warehouse consolidations, proximity to key ports and a growing population, over the past several years the Inland Empire has benefited from the establishment of dozens of large-scale e-commerce and omnichannel facilities. Strong demand for big-box industrial product and a constrained supply should keep fundamentals healthy in the Inland Empire industrial market for the foreseeable future.” 

— Steve Bellitti, SIOR Senior Executive Vice President | Ontario

Big-Box Building Inventory

Major Logistics Drivers

The Inland Empire offers a plethora of logistics advantages including close proximity to the two largest seaports in North America: the Port of Los Angeles and the Port of Long BeachThe two ports combine to handle more than half of the loaded inbound container volume entering the United States and remain one of the top demand drivers of industrial space in the Inland Empire.

The region also boasts access to two interstate highways (I-10 and I-15), offering direct transportation across the east and north United States. In addition, the UPS Regional Air Hub at Ontario International Airport serves customers throughout the western United States, Hawaii and Canada.

Notable Transactions

Big-Box Leases
Tenant Lease Size (SF) Building Address Submarket Lease Type
Amazon.com, Inc.
1,007,705 4950 Goodman Way Eastvale Direct/New
Lifetime Brands, Inc.
702,668 1221 Alder Ave. Rialto Direct/New
TBC Corporation
683,269 2501 San Bernardino Rd. Redlands Direct/New
J. C. Penney Company, Inc.
624,627 5959 Palm Ave. San Bernardino Direct/New
Big-Box Sales
Buyer Building Size (SF) Building Address Submarket Sale Type Sale Price (PSF)
American Realty Advisors
1,138,119 Multiple Ontario Investment $124.00
Four Seasons Real Estate
303,100 6975 Sycamore Canyon Blvd. Riverside Investment $93.00
Seneman LLC
168,987 150 Radio Rd. Corona Owner/User $133.00
TA Associates
168,346 3900 Hamner Ave. Eastvale Investment $84.00

Big-Box Key Statistics

*Average NNN taking rent for the first year of a lease transaction.

Historical Data

Big-Box Buildings in Inland Empire
# of Buildings Existing Inventory (SF) Vacant Inventory (SF) Vacancy Rate Leasing Activity (SF) Net Absorption (SF) Taking Rent (PSF/YR)* Capitalization Rate Under Construction (SF) Construction Completions (SF)
2009
463 209,587,000 26,827,136 12.8% 7,303,000 (6,250,000) $3.48 7.2% 667,000 2,225,000
2010
464 210,254,000 16,736,218 8.0% 16,314,000 11,897,000 $3.36 6.8% - 667,000
2011
467 213,200,000 11,512,800 5.4% 18,136,000 10,678,000 $3.60 6.2% 2,763,000 -
2012
494 227,645,000 10,319,500 4.5% 15,832,000 3,600,000 $3.72 5.7% 2,100,000 2,513,000
2013
530 249,632,000 12,205,000 4.9% 15,767,000 10,640,000 $3.96 5.2% 16,049,000 6,718,000
2014
551 263,974,000 14,888,134 5.6% 21,468,000 12,168,000 $4.32 5.4% 14,648,000 19,152,000
2015
588 287,468,000 16,163,000 5.6% 27,178,000 17,374,000 $4.56 5.2% 14,717,000 21,710,000
2016
622 304,635,000 15,264,000 5.0% 37,564,000 17,784,000 $4.80 5.0% 15,573,000 16,981,000
1H 2017
630 309,823,625 13,194,309 4.3% 15,206,351 5,986,789 $5.16 4.3% 19,102,159 2,539,000

*Average NNN taking rent for the first year of a lease transaction.

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Kansas City, MO

With roughly 37 million square feet of big-box real estate, Kansas City is the smallest market showcased in this report. While the region is nearly 10 times smaller than the Inland Empire, its logistics advantages provide a wealth of opportunity for both occupiers and developers. Kansas City is centrally located, providing a level of access to consumers that is difficult to match.

Driven by the impetus to quickly deliver products to consumers, big-box activity continues to increase in Kansas City. The market saw slightly more than 2.1 million square feet of net absorption in the first half of 2017, putting this year on pace to be the highest for net absorption in more than a decade. Development has been booming since 2015, and a record 8.7 million square feet of new big-box real estate were completed in 2016. Because of this, vacancy rates increased to 13.3% for big-box product at year-end 2016, but declined to 11.3% at midyear.

Despite double-digit vacancies, developers are bullish on the Kansas City market with 6.7 million square feet under construction. As occupier demand continues to grow in the coming quarters, look for vacancies to further decrease and taking rents to increase beyond the current decade-high rate of $4.26 per square foot per year.

Kansas City continues to grow as a key industrial market, driven by the expansion of distribution and e-commerce-related activity within new big-box developments. The strength of the Kansas City industrial market is a result of our centralized location and multiple intermodal operations, which enable the delivery of goods to 85% of the nation’s population within two days. The majority of recently delivered big-box projects in Kansas City were built on a speculative basis, which points to the strong market fundamentals and appetite for big-box users to be located within Kansas City.” 

— Ed Elder, SIOR President | Kansas City

Big-Box Building Inventory

Major Logistics Drivers

The Logistics Park Kansas City (LPKC), located adjacent to a BNSF intermodal facility, is one of the largest inland ports in the country and continues to grow and attract tenants at an unprecedented pace for the market. LPKC delivered more than 3.1 million square feet of industrial product in 2016, with more than 2.7 million square feet of that product already accounted for by tenants. The facility totals 443 acres with 64,000 feet of track, more than 1,800 parking spaces, 4,300 container parking spots and eight all-electric cranes.

Notable Transactions

Big-Box Leases
Tenant Lease Size (SF) Building Address Submarket Lease Type
Spectrum Brands Holdings, Inc.
927,100 Inland Port XXXIII Edgerton Direct/New
Amazon Prime Pantry
446,500 27200 W. 157th St. New Century Direct/New
Staples, Inc.
260,000 Northland Park I Kansas City Direct/New
Progress Rail Services Corporation
250,000 Riverside Horizons Riverside Direct/New
Big-Box Sales
Buyer Building Size (SF) Building Address Submarket Sale Type Sale Price (PSF)
Himoinsa Power Systems, Inc.
515,132 16600 S. Theden St. Olathe Owner/User $46.59
Block Real Estate Services
450,000 21800 W. 167th St. Olathe Investment N/A
Lexington Realty Trust
446,500 27200 W. 157th St. New Century Investment $32.25
L&B Realty Advisors, LLC
260,707 16851 W. 113th St. Lenexa Investment $65.21

Big-Box Key Statistics

*Average NNN taking rent for the first year of a lease transaction.

Historical Data

Big-Box Buildings in Kansas City
# of Buildings Existing Inventory (SF) Vacant Inventory (SF) Vacancy Rate Leasing Activity (SF) Net Absorption (SF) Taking Rent (PSF/YR)* Capitalization Rate Under Construction (SF) Construction Completions (SF)
2009
56 22,978,570 1,231,982 5.4% 1,908,375 1,135,763 $3.85 8.5% 0 1,107,000
2010
56 22,978,570 690,228 3.0% 826,146 541,754 $3.85 8.8% 0 0
2011
56 22,978,570 676,466 2.9% 1,435,309 13,762 $3.85 - 350,000 0
2012
57 23,328,570 414,695 1.8% 2,238,385 611,771 $3.71 7.7% 821,663 350,000
2013
58 24,150,233 1,034,054 4.3% 2,022,897 202,304 $4.11 6.9% 1,961,624 821,663
2014
66 27,246,879 2,045,991 7.5% 2,142,327 2,084,709 $4.05 7.0% 2,443,448 3,096,646
2015
70 29,293,448 1,445,305 4.9% 2,258,402 2,647,255 $4.14 7.6% 5,427,032 2,046,569
2016
83 35,558,261 4,723,137 13.3% 3,703,369 2,986,981 $4.24 6.3% 7,891,565 8,655,986
1H 2017
87 37,260,507 4,309,598 11.3% 1,145,283 2,115,785 $4.26 6.0% 6,686,380 3,674,668

*Average NNN taking rent for the first year of a lease transaction.

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Memphis, TN

Memphis is an international distribution hub with a transportation and logistics infrastructure that includes five Class I railroads, 490 truck terminals and the nation’s fifth-largest inland port. Due to these factors, occupiers and developers alike have expressed interest in the region. Despite continued demand, Memphis remains the most economical big-box market in North America, with taking rents averaging only $3.25 per square foot per year in the first half of 2017.

In 2016, a record 14.8 million square feet of big-box product leased in Memphis. Leasing in 2017 has not kept pace, mostly due to the lack of full-building vacancies. However product under construction in the region increased to 3.8 million square feet at midyear — the most big-box projects under construction in a decade.

Leasing activity during the first half of 2017 showcases the demand for modern fulfillment centers in Memphis. Sephora, McCormick & Company, GENCO and Synnex signed leases for buildings of more than 500,000 square feet, and all were in newer Class A product. As occupier reliance on inland logistics hubs grows in the coming years, demand for big-box product in Memphis will likely continue to increase, producing positive fundamentals and growth.