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The bigger, the better…

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At least in this case it seems to be

By Dan Phair, VP-Development (Indianapolis, IN)

As the industrial market continues its recovery from the lows seen in 2009/2010, there is a noticeable trend within the industrial recovery in many Midwest and coastal US markets.  The increasing demand for modern bulk warehouse space by large corporations, e-commerce companies, and 3PLs is on the rise, outpacing the demand for all other industrial property types.

In some of the stronger US metropolitan markets, there has been the re-introduction of 100% speculative bulk warehouse buildings constructed due to the demand for new space. Even those markets without any speculative building projects have shown a significant positive absorption of existing modern bulk warehouse space and an uptick in RFP activity for newly constructed modern bulk warehouse build-to-suits.

According to a summer 2012 study released by one of the large brokerage houses, there doesn’t appear to be any slowdown in the demand for modern bulk warehouse space as they are tracking over 500 space requirements scouring the US for the right modern bulk building in the right location.

In looking more specifically at some of the vacancy and absorption statistics provided in Cassidy Turley’s 2nd and 3rd quarter market snapshots for industrial leasing activity in Indianapolis and other comparable Midwestern markets, the rising demand of modern bulk warehouse trend is only reinforced.

Below are just some of the stats referenced in those snapshots by market.

Modern Bulk Vacancy Rate — 2.2%

Bulk A accounts for 33% of all industrial net absorption year-to-date

St. Louis:
Traditional Bulk — YTD Net Absorption is 763,169 SF

Kansas City:
Bulk Distribution & Warehouse Space — 7.6%

Bulk Warehouse — YTD Net Absorption of 1,489,000 SF

Bulk Warehouse — YTD Net Absorption of 805,398 SF

As the supply chains for most companies continue to adapt to the increase in internet sales, the need for modern bulk warehouse should continue across the US. With Holladay’s well positioned AmeriPlex Corporate parks and the newly acquired modern bulk facility in South Bend, there should be an opportunity for Holladay to benefit from this rising trend.

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