A rendering of an industrial project Matan is developing

WASHINGTON, DC–Conditions couldn't be more favorable for the industrial asset class right now. But traditional industrial tenants? Not so much. They are titling against fundamentals that include less inventory and rising rents. They are also going up against new tenants competing for the same space, such as e-commerce retailers that must have last mile delivery options and locally-based food producers, wineries and brewers that are targeting this space as well, especially within urban areas.

In DC these trends translate into some disconcerting numbers, according to JLL – namely that rents have jumped 9.4% over the past 12 months.

Meanwhile, nearly 6.5 million square feet of product will have exited the metro area industrial market since 2000.

Some of this is due to the trend of adaptive reuse of industrial product in the District's Ivy City into luxury apartments, retail and specialty tenants, JLL notes. The former Hecht Warehouse has been turned into luxury apartments and Washington Cash and Carry has been replaced by One Eight Distilling at 1135 Okie Street, NE, as two examples.

It is the same story in Northern Virginia, where Merrifield and Alexandria have accounted for the bulk of shrinking inventory. Most recently, Paradigm Development and MRP Realty announced they are partnering on commercial redevelopment of a 17-acre former stone and gravel processing facility in Alexandria along the predominantly industrial Eisenhower Avenue Corridor.

Not all of the product is moving in this direction, at least not immediately.

The Matan Cos.' recent purchase of Plaza 500, a 502,830-square foot industrial park in Alexandria, Va., is part of the company's plan to develop a larger presence around the Beltway especially in Northern Virginia.

It has some long-term leases there so Matan will keep it as a warehouse site for at least seven to ten years, Dan Cain, development manager for the company told GlobeSt.com recently. After that, however, the use may shift. Other developers have been acquisitions in the neighborhood, he noted, with the goal of developing mixed-use projects.

In DC these trends translate into some disconcerting numbers, according to JLL – namely that rents have jumped 9.4% over the past 12 months.

Meanwhile, nearly 6.5 million square feet of product will have exited the metro area industrial market since 2000.

Not all of the product is moving in this direction, at least not immediately.

Instant Insights /

Industrial Tenants Face Less Inventory, Rising Rents, New Competition

Related Stories

Recommended For You