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The industrial sector powered through economic headwinds in 2022 and despite labor shortages, rising construction costs and interest rates, and supply chain issues, the forecast for the sector remains bullish. Some 713 million square feet of industrial space was under construction across the nation at the end of 2022, with demand expected to continue its boom.
Heightened tenant demand kept pace with supply in most markets. However, low industrial vacancies and rapidly increasing lease rates in major metros prompted businesses and developers to turn their attention to secondary markets, where some 143 million square feet of industrial space was under construction at the end of December 2022.
In the table below, we identified the top five emerging industrial markets in the U.S. using CommercialEdge data on square footage under construction as a percentage of existing stock, trade, transportation and utilities employment movement, transaction volume and the average price per square foot industrial assets traded at.
| Rank | Market | Sq Ft Under Construction | Transaction Volume (MM) | Y-O-Y Employment Change | Overall Score |
| 1 | North Central Florida | 7,517,059 | $78.4 | 3.4% | 135 |
| 2 | Savannah-Hilton Head, Ga. | 45,355,883 | $297.7 | 6.8% | 129 |
| 3 | Asheville, N.C. | 2,010,120 | $13.7 | 5.1% | 124 |
| 4 | Omaha, Neb. | 4,200,581 | $30.7 | 3.4% | 115 |
| 5 | Columbia, S.C. | 1,493,152 | $178.4 | 3.1% | 112 |
1. North Central Florida
Image by paulbr75 via Pixabay.com
Thanks to a pandemic-driven migration from states with higher taxes, South and Central Florida became increasingly populated, resulting in fewer availabilities and more limited low-cost opportunities. With access to multiple seaports, available and efficient railway transportation and interstate travel, as well as access to four municipal airports, North Central Florida emerged as an attractive prospect for new and expanding businesses, being a natural hub for logistics and distribution. This was reflected in employment as well; More than 1,400 new jobs were added in the trade, transportation and utilities sector year-over-year through November 2022, or a 3.4 percent increase.
Because of the predominantly rural nature of the region, there are multiple sites with ample acreage, as well as large parcels of undeveloped land situated near major interstates. Consequently, 7.5 million square feet of industrial space was under construction in the market at the end of 2022, accounting for 16.8 percent of total inventory. Meanwhile, transaction volume totaled $78.4 million, with the year-over-year price per square foot increasing 48.8 percent and reaching $89.62 per square foot, CommercialEdge data shows.
2. Savannah-Hilton Head, Ga.
Photo by Tyler Edic on Unsplash.com
Savannah’s strong performance throughout 2022 exceeded its record performance of 2021, driven by increased leasing velocity and record-breaking development activity. The Port of Savannah played a major role in attracting industrial developers and investors to the area, as it ranks as one of the fastest-growing and most efficient deep-water ports in the nation. With several major expansions underway—such as the new Savannah Container Terminal—the momentum is expected to continue.
Demand for industrial facilities to support rising freight volumes is at an all-time high in the market. As a result, developers remain active; At the end of 2022, the Savannah-Hilton Head market had 45.4 million square feet of industrial space under construction, representing 45.9 percent of total inventory. One of the largest up-and-coming projects includes the $5.5 billion Hyundai electric vehicle plant, a 3,000-acre project in Bryan County dubbed the largest economic development project in the state. Meanwhile, industrial transactions in 2022 totaled $297.7 million, with assets trading at an average of $111.83 per square foot. This accounted for a 12.7 percent increase from 2021.
3. Asheville, N.C.
Asheville’s diverse industry base—which includes health-care, science and technology, tourism and manufacturing—contributes to its present-day success. Employment in trade, transportation and utilities was also strong, rising 5.1 percent and increasing by 1,800 new jobs year-over-year as of November 2022.
At the end of December 2022, Asheville’s under-construction pipeline featured some 2 million square feet of industrial space, accounting for 7.1 percent of total inventory. Transaction volume in 2022 totaled $13.8 million. The price per square foot for industrial assets averaged $51.82, representing a 19.1 percent increase from December 2021.
4. Omaha, Neb.
Photo by John Matychuk on Unsplash.com
Omaha’s industrial sector is booming, largely thanks to its pro-business government which encourages development and kept national tenants such as Kellogg and Tyson Foods in the market but also encouraged Amazon to increase its footprint here. Another factor was its strong workforce; The metro added 3,100 new trade, transportation and utilities jobs between November 2022 and November 2021, accounting for a 3.4 percent increase.
Demand for industrial space—particularly warehouse and distribution centers—increased throughout the last year, and Omaha’s under-construction pipeline at the end of 2022 included 4.2 million square feet of industrial space, representing 4.7 percent of the total stock. Meanwhile, data provided by CommercialEdge shows that sales volume stayed above $30 million through the end of 2022. Industrial assets traded at $84.32 per square foot, accounting for a 24.9 percent year-over-year increase.
5. Columbia, S.C.
Columbia, S.C., is strategically located at the intersection of major interstates and transportation corridors, making it an ideal location for companies to distribute goods and access markets throughout the Southeast. It also has a diverse and well-educated workforce with expertise in advanced manufacturing, logistics and other industries that require specialized skills. Employment gains were especially solid in the trade, transportation and utilities sector. The market added 2,300 new jobs between November 2021 and November 2022, representing a 3.1 percent increase.
Overall, 2022 ended with 1.5 million square feet of industrial space under construction, accounting for 3.8 percent of total inventory. Industrial investment sales in 2022 totaled $178.4 million. Assets traded at an average of $72.51 per square foot, or a 101.9 percent increase year-over-year.
A previous version of this article ranked Boise, Idaho as the number entry. Upon a revision of figures, we’ve removed that entry to better illustrate the objective of the piece.
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