SAN DIEGO-Big-box industrial is still king for many CRE professionals, and certain regions of the country are especially strong for this sector of the industry, as GlobeSt.com reported last week. Jones Lang LaSalle caught up with experts during NAIOP’s Development ’13 conference here last week to talk about big-box industrial and where they see the trend heading, and the firm shared videos of these interviews exclusively with GlobeSt.com.
For Prologis, the firm is still very big on Houston, the Inland Empire and SoCal for big-box space, Kim Snyder, president, US Southwest for Prologis, said. “We’re a pretty big fan of the Pacific Northwest,” he added.
Referring to himself as “a big-box guy,” Snyder confirmed that the average industrial building size for Prologis is 250,000 square feet and that the firm caters more and more to large floor-plate users. “There’s been a big recovery in large big boxes of 500,000 square feet and greater.”
Snyder added that in the industrial realm, his firm has seen the biggest rent growth in big-box spaces as opposed to smaller buildings where rent growth used to occur. “2014 is the year of rent growth,” he said.
With not a lot of construction going on and pent-up demand from the recession, space is getting taken up, which is causing a supply shift and a chance for rent growth. Snyder added that he expects to see between 4.5% and 5% rent growth over the next few years, “and that begins in earnest in 2014.”
To view the complete video with Kim Snyder, click here.
The complexion of demand for big-box space comes from retailers, consumer products and food-and-beverage items, added Craig Meyer, president, industrial, for JLL. With e-commerce a big driver for this space, Meyer said his firm is most concentrated on the big logistics centers of the Northeast, including central Pennsylvania, New Jersey and New England.
Speculative big-box construction is ramping up in a great majority of markets, Meyer added, yet he doesn’t expect to see overbuilding. “We track 42 markets across the US, and 82% of markets have some sort of spec construction, but we don’t anticipate an overbuilt environment due to the stringent underwriting of lenders.”
To view the complete video with Craig Meyer, click here.