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Industrial development and investment sales are simmering down after an explosive period driven by COVID supply chain challenges<\/h3>\nIndustrial development and investment sales are simmering down after an explosive period driven by COVID supply chain challenges<\/h3>\n<\/p>\n
Triangle Business Journal
\nNovember 24, 2023<\/p>\n
COVID had a profound impact on industrial development in 2020 and 2021 as consumers shifted to shopping online and retailers scrambled to meet demand. Logistics partners re-designed supply chains to more efficiently serve customers, driving demand for more industrial and logistics space.<\/p>\n
In the Triangle, rents grew as much as 20% year over year.<\/p>\n
Those good times are showing signs of levelling off as the industry and its investors adjust to higher land costs, higher interest rates, and uncertainty about where the Fed\u2019s headed next.<\/p>\n
Despite the challenges, Justin Parker, vice president and Triangle market leader for multi-asset class design-build developer Al. Neyer, says the local market continues to benefit from population growth, world class universities and a diverse economy. The company has a strong track record of industrial projects in the Triangle since entering the market in 2019.<\/p>\n
\u201cThe single biggest ingredient in our success here has been our local presence and growth in the market itself,\u201d Parker says. \u201cThis is still a relationship business, and when do those relationships count most? They count most when it gets hard, and it\u2019s hard right now.\u201d<\/p>\n
Parker made his comments as part of a discussion hosted by the Triangle Business Journal exploring trends in industrial development. Joining Parker in the conversation was Hunter Willard, executive vice president of Colliers International, and Hunter Stewart, vice president and principal at Lee & Associates, a commercial real estate broker. Jason Christie, president and publisher of the Triangle Business Journal, moderated the discussion.<\/p>\n
On fast-growing submarkets<\/strong><\/p>\n The post COVID industrial frenzy drove growth in several Triangle submarkets, including the 40-85 corridor, Southeast Wake and Johnston counties, in Garner and the U.S.-1 South corridor.<\/p>\n Growth in Chatham County is fueled by the introduction of the sprawling Chatham Park, along with VinFast electric vehicle manufacturing site, which broke ground in July at Triangle Innovation Point.<\/p>\n Colliers and Al. Neyer teamed up in the 40-85 corridor to build some of the first spec industrial there, a market that had historically been a build-to-suit market. The proximity to Research Triangle Park, the labor force of both the Triangle and Greensboro and available infrastructure make it a strong corridor, Parker says.<\/p>\n \u201cWe were a first mover working with Hunter Willard\u2019s team at Colliers building spec industrial on the 40-85 corridor at Buckhorn Industrial Park in Mebane and Haw River Distribution Center in Graham,\u201d Parker says.<\/p>\n Likewise, Southeast Wake County and Johnston County have been strong submarkets. The markets benefit from connectivity to U.S. 70 and I-95. Al. Neyer has a speculative project at Brogden Industrial in Smithfield leased by Austin Nagy & Ann-Stewart Patterson of CBRE and is building a fifth building at Garner Business Park having fully leased four buildings partner with Ed Brown & Daniel Herring with Tri Properties on leasing.<\/p>\n Stewart says the Triangle\u2019s density of talent, high quality of life, and the well-established reputation of RTP attracted life science companies during the pandemic, eventually creating a cluster. This tremendous influx in turn created pricing pressure which pushed other tenants to submarkets, especially Garner.<\/p>\n \u201cLife science came in and basically pushed all those traditional flex and industrial users we\u2019ve worked with for the last 15 years out. Submarkets like Garner were the next obvious fit,\u201d Stewart says.<\/p>\n U.S. 421 and Hwy. 64 are likely the next corridors for growth stretching all the way to Sanford, he says.<\/p>\n