The industrial property subcategory 3PL, or third party logistics, is a rapidly expanding market across the US. Steady growth in e-commerce has created a growing dependency upon these warehousing and logistics properties thanks to their effect of reducing delivery time on goods shipped to customers. With e-commerce sales worldwide set to pass $2 trillion in 2017 in pursuit of double-digit annual growth, knowledge of the 3PL industry will pay off for the commercial real estate professional patrolling this piece of the national supply chain. What follows in this post are two helpful sources of quick information about the 3PL as it lives and breathes today.
The national market for commercial real estate is a massive thing, a meta-market encompassing tens of thousands of localities, each with their own economies and histories, subject to their own internal logic — and illogic. When trying to take all of these in as a whole, it’s important to remember that the local stories always loom larger than might be apparent, and that effects are overwhelmingly driven by local needs, wants and preferences.
Xceligent’s most recent report on Atlanta’s industrial property market (download the Atlanta 2Q Industrial Market Report PDF here) is packed with great news for the property business – falling unemployment, high absorption, sliding vacancy rates, and a strong record of adding industrial-using jobs with almost 24,000 added year-over-year.
Detroit’s industrial real estate past is a story of too many eggs in one economic basket. When the over-concentration of auto industry capital fled Detroit, the communities that capital once sustained vanished, and the rest is rust belt history.
The newest US Industrial Outlook from Colliers puts Q1 2016 in its sights. Bottom line: the news is good. Q1 shows the lowest national industrial vacancy rate in over a decade. Decline in industrial vacancy marked its 22nd consecutive quarter to arrive at 6.3%, which is 70 basis points lower than this time last year.
Imagine: six million (and counting) square feet of warehouse space, with a mind-boggling potential for fourteen million. A location central to the US. And climate that never strays from 65-71 degrees Fahrenheit.
There’s only one catch: it’s 100 feet underground.
Welcome to Subtropolis, the commercial space under Kansas City, MO that started as limestone mines and has since developed into a logistics and storage solution for 53 businesses employing over 1,700. Tenants include the US Postal Service, a film cold storage facility housing reels of “Gone With The Wind” and “The Wizard Of Oz”, as well as a University leasing out classrooms. The complex got going in the 1950s when its first tenant – a NASA scientist seeking controlled conditions to test equipment – moved in.
Four areas of retail real estate to watch in ’16, heightened apartment demand stemming from soft home demand, spotlight on Indiana, and a big deal closes in Rubber City, aka Akron, OH — it’s all here in today’s National Commercial Real Estate News Roundup.
The cost of money has come up for the first time in more than nine years: the Federal Reserve Bank announced a raise in its short-term interest rate of a quarter point. For a quick look at various takes on the move, check out the following video gallery
A pair of articles today explain a new renaissance in Motor City commercial property and infrastructure centered on technology business expansion. Together they point out how this isn’t the economic and cultural stretch one might think for the town that so famously put its industrial eggs into one auto-making basket – and saw globalization and capital flight devastate its fabric when that industry chose foreign labor.
In Dan Rafter’s piece at REJournals.com Detroit A Tech Hub? You Bet the report mentions the recent Jones Lang Lasalle’s US Technology Office Outlook report that ranks Detroit among the top 30 in the US for total leases to the technology business.
You might be surprised to learn that Detroit has become a top target for tech start-ups. JLL in its U.S. Technology Office Outlook report ranked the city as among the top 30 in the nation for total tech leasing. What makes Detroit so appealing for tech firms? JLL pointed to low real estate costs, an affordable cost of living and a competitive pool of talented employees.
These factors are inspiring technology start-ups to open their doors in the Motor City. According to JLL’s research, the Detroit market is now supporting 50,796 tech jobs. JLL says, too, that Detroit’s high-tech employment rate is growing 4.3 percent each year.
The Detroit market has been home to some significant tech lease transactions. Griffels recently renewed its lease of 67,934 square feet in the Mars Corporate Center in Southfield, while Logicalis took out a 40,500-square-foot lease at 2600 Telegraph Road in Bloomfield Hills. Lochbridge recently took out a 29,000-square-foot lease at 150 W. Jefferson Avenue in Detroit’s CBD.
Electric Cars And A Fiber Freeway
Adding to the resurgence is more technology, both in infrastructure and in manufacturing target. Ford Motors has recently decided to invest $4.5 billion in the manufacture of electric and hybrid cars by 2020, which adds to the tech resurgence. As reported in GlobeSt. by Brian Rogal:
“One of the things that people don’t realize about Detroit is that the auto industry is heavily dependent on the high-tech sector,” Dave MacDonald, an executive vice president ofJLL, tells GlobeSt.com. And the recent decision by Ford to invest billions in electric vehicles will further boost the need for tech workers.
Another big factor bolstering technology companies here is the presence of Quicken Loans and its family of companies, which have bought up more than 80 downtown properties, many of them 75 to 100 years old, the type of structure most favored by tech-savvy millennials. “Quicken is really a tech company,” MacDonald says, and it has filled these buildings with about 13,000 workers, helping to send the CBD’s vacancy rate into a historic plunge.
And last month Rocket Fiber, a Detroit-based fiber-optic provider that is part of Quicken’s family of companies, has just activated an internet fiber ring for the city’s downtown that at an affordable price offers connections 1,000 times faster, MacDonald says. In its latest report on the US technolgy sector, US Technology Office Outlook, JLL compares it to “the Google Fiber model that spurred business and startup activity when it deployed in Kansas City.”
Affordable commercial property options and 21st century infrastructure in a great American central business district is the kind of news Detroit – and office tenants eyeing it – can surely use.
At NAR Expo 2015, the announcement came for the year’s winners of the National Commercial Awards. We offer our deepest congratulations to these leaders in their markets and associations!