Will speculative building soon return to Louisville’s industrial sector? That’s the question asked by CBRE in its third-quarter MarketView report on that city’s industrial sector.
And the answer? Maybe.
I know that’s not a definitive answer. But in today’s commercial real estate market, definitive answers aren’t easy to come by. But in their report, CBRE researchers point to the seventh conesecutive quarters in which the Louisville industrial market enjoyed positive net absorption as one reason why developers might soon start building spec warehouses and distribution centers in this busy city.
“More positive results in the third quarter may finally convince some developers to pull the trigger on speculative building in the metro Louisville industrial market,” write the report’s authors in the very first sentence of the MarketView. You can’t accuse CBRE researchers of burying the lead.
Overall, the report contains good news. The industrial vacancy rate for the city fell to 5.2 percent in the third quarter, while the sector saw net absorption of 896,710 square feet during the quarter.
There’s new construction in this sector, too. Most notably, construction on the 1-million-square-foot build-to-suit project for Amazon.com on Highway 62 at River Ridge in the Southern Indiana submarket is scheduled for completion this October. The city also saw construction wrap on the 232,600-square-foot UPS Supply Chain Solutions facility in the Southside/Airport submarket.
There’s even one spec project going on now in the Louisville area. Clarion in the third quarter broke ground on its nearly 407,000-square-foot speculative project in the Southside/Airport submarket. This is significant; the Clarion project is the first speculative project in this sector in the Louisville market since 2009.
The big question now is whether Louisville will see even more industrial spec building in the coming months.
— Dan Rafter