While major industrial and logistics markets capture most of the headlines, industrial occupiers and investors know that dozens of secondary markets are essential to supply chains in the U.S.
Of the 81 industrial markets Cushman & Wakefield tracks, the firm selected five emerging industrial real estate markets outside of primary markets. The top markets to watch are based on key metrics from 2019 through 2021, including net absorption, new tenant demand, vacancy, rent growth, construction pipeline and deliveries.
Included in the five is Salt Lake City, Utah’s largest city. With a growing population and surging economy, the metro area is home to roughly 1.2 million residents and has experienced annual population growth of approximately 1.0% since 2019, outpacing the national average. The city’s real GDP grew around 8.5% in 2021 and is expected to increase by another 4.1% in 2022. The region offers similar locational benefits as Phoenix, given its proximity to the West Coast markets (all of which are high rent markets), as well as additional accessibility to the Midwest.
These advantages have benefited the industrial sector. During the past three years, Salt Lake City yielded strong rent growth with rents nearly doubling from Q4 2019 to Q4 2021, up 60% in that time. As of the first quarter of 2022, vacancy hit 1.9%, a new record low after averaging 3.6% during the past three years.
Unsurprisingly, the tightness of the market has been driven by strong demand as more than 28 million square feet (msf) of new leasing activity was recorded in the past three years. With deliveries totaling 15 msf for the same time, the market will need more space to help alleviate the downward pressure on vacancy. Fortunately, the pipeline is set to deliver 11 msf of new product over the next few years but Salt Lake City will likely need more as demand persists.
Looking ahead, from 2023 to 2025, Salt Lake City’s economy is expected to climb at an annual rate of 2.0%, led by manufacturing and real estate.
The other four emerging industrial markets included:
For more, check out our “Five Industrial Markets to Watch.”