15 May Industrial Assets in Secondary Markets Red Hot for Investors
Industrial Assets in Secondary Markets Red Hot for Investors
Secondary cities with strong population growth and lower prices are the target for industrial investors, according to industry experts. Institutional investors are targeting secondary markets for office locations, the investments in industrial buildings in those markets is also seeing an increase. In 2018, the overall U.S. industrial sales volume totaled $54.9 billion, which was up by 8.9 percent when compared to year-over-year, according to Avison Young Spring 2019 Global Industrial Market Report. The total sales volume in secondary markets was close to $3.9 billion through March of 2019.
Industrial assets continue to see an increase in values, and rose by 15 percent year-over-year, to make an average of $116 per square foot. Because of these factors, investors are turning to lower-cost secondary markets with rising investment volumes. Some cities that are being targeted by investors include Greenville and Charleston, South Carolina, Memphis, Tennessee and Savannah, Georgia.
Despite a slight dipped in average rent growth of industrial properties in secondary markets, industry experts believe the industrial sector is red hot as rents are at their highest point in over a decade. In addition, net absorption rates in secondary markets are at their highest level since 2016.
“Given that the world seems to want everything in 10 minutes, I think you’re going to see [industrial construction] continue,” says Billy Procida, president of Procida Funding & Advisors, a real estate agency.
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