by Dan Rafter
Craig Collins, senior real estate advisor with Cushman & Wakefield Commercial Kentucky, says it simply: The Louisville commercial real estate market is hitting on all cylinders.
It’s difficult to argue. Unemployment in this Kentucky city is down. Developers are adding spec industrial buildings at a quick pace. The UPS Worldport continues to entice new businesses to the market. And business is so strong at Ford’s sport utility vehicle manufacturing plant in the city, that the automaker this summer gave its workers just one week off during the summer instead of the traditional two.
That’s a lot of good news. And Collins, along with the other top real estate pros working this market, doesn’t expect this stretch of positive commercial activity to end anytime soon.
“With the UPS Worldport here, Louisville has always had a very strong industrial market,” Collins said. “Today, industrial has been very active. There is more than 600,000 square feet of spec industrial buildings being built and absorbed right now. We have had a very active year in when it comes to industrial absorption.”
The best news? The big companies helping to fuel Louisville’s strong commercial real estate market are investing even more dollars into their facilities, something that will create more jobs and even greater demand for new commercial development.
Ford, for example, is investing dollars into its two Louisville manufacturing plants. UPS is spending about $400 million for an expansion to its Worldport Louisville hub.
And while industrial is booming, the city’s multifamily market isn’t much cooler. Collins says that developers are expected to add about 2,000 apartment units to the city in the next 18 months, much of these new units coming to Louisville’s downtown core.
“Louisville hasn’t had much urban market-rate housing in the past,” Collins said. “That will be changing in the next six to 24 months. Old buildings are being redeveloped. New construction is coming from the ground-up.”
Even the city’s hotel market is on an upswing. The Kentucky International Convention Center in Louisville began a $180 million expansion this summer. At the same time, developers are building new hotels to serve the city’s downtown.
Louisville’s bourbon-themed tourism efforts – dubbed BourbonCountry by the Louisville Convention & Visitors Bureau – have succeeded in boosting the number of tourists who visit the area each year. At the same time, the expansion and addition of local business parks has boosted the number of travelers who are renting hotel rooms on business trips.
It’s all added up to a busy time for the city’s suddenly bustling hotel market.
“We are fortunate in Louisville in that we have a very diversified economy,” Collins said. “We don’t rely on just one industry here. We have companies such as Yum! Brands and Humana that are headquartered here. We are the regional headquarters for many financial institutions. The University of Louisville is here. We have a strong manufacturing base with companies such as Ford and GE. Investors have found Louisville to be what we call a ‘Steady Eddie’ type of market.”
“There are no downdrifts in Louisville,” Collins added. “If you have good real estate in Louisville, you have good real estate. It’s not subject to the ups and downs of one particular industry.”