6.9.17: Industrial Warehouse Buildings Are Hot!

Industrial warehouse real estate is one of the hottest sectors in commercial real estate this year, with e-commerce boosting demand. Many markets are reporting industrial building space is being gobbled up quickly, with Amazon leading the way.

In New Jersey, 9.4 million square feet of industrial space is under construction, according to Kyle Schmidt of Cushman and Wakefield, and 51% has been pre-leased. Based on strong interest in the remaining buildings, it is possible that the properties could be over 70% pre-leased by the time the buildings are ready for occupancy. In April, Amazon announced plans to open three additional fulfillment centers in Cranbury, Edison and Logan, New Jersey totaling nearly 3 million square feet. Amazon’s first major fulfillment center — which contains 1.2 million square feet of space — opened in 2014 in Robbinsville, New Jersey.

In South Florida, inventory of industrial space has grown by 9 million square feet in the past three years, according to a new construction update published by JLL Research. Another 4.6 million square feet of warehouse space is expected to come online in 2017, surpassing last year’s record of 3.9 million square feet. Amazon is reportedly negotiating a lease for an 850,000-square-foot warehouse. This is in addition to its existing footprint of over 500,000 square feet of space in Miami-Dade County, Florida.

Furthermore, Amazon just announced that it is spending $200 million on what will be one of its most expensive fulfillment centers ever. Amazon’s new regional fulfillment center in Utah will total 800,000 square feet, according to Utah Governor Gary Herbert. The state gave Amazon a $5.6-million tax credit to win the facility. Amazon was reportedly considering six other states for the center, according to the Tribune.

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This entry was posted in CMBS Conduit Loans, Commercial Lending, Commercial Real Estate Loans, Michael D. Sneden, News & Recent Closings, The Banker's Mortgage Conduit, Valuexpress and tagged , , , , . Bookmark the permalink.

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