Louisville Industrial Closes Out Banner Year

LOUISVILLE, KY–The local industrial market recorded its highest quarter of net absorption in market history, according to the latest report from CBRE. “Louisville is hitting on all cylinders,” said CBRE Senior Vice President Kevin Grove.

The area saw 3.8 million square feet of positive net absorption in the fourth quarter, and more than 10 million square feet of positive net absorption in 2018.

“We capped off a historic year with the most activity we have ever seen,” said Tom Sims, senior vice president with CBRE.

The Q4 total, outpaced 2018’s second quarter numbers by 1.1 million square feet, while the total 2018 numbers outranked the previous high from 2015 by 7.2 million square feet. The market has seen steady growth and increasing positive net absorption for several years now.

“Louisville was one of the only markets in the country to have net positive absorption every year through the entire recession and was second only to Chicago in net absorption in the Midwest in 2018,” Kevin Grove, senior vice president at CBRE tells GlobeSt.com.

Thanks to a number of large lease deals, which closed in the fourth quarter, Louisville saw the vacancy rate drop from 6% at the end of Q3 to 4.7% at the end of the year. With the decreased vacancy, lease rates rose from $3.75 per square foot to $3.85.

During Q4 the Louisville market saw a number of large construction projects complete. Three of these were speculative projects totaling 660,000 square feet. In addition, there are six additional facilities under construction, which will add 1.36 million square feet to the area, including 430,000 square feet of speculative space.

Industry experts expect to see continued growth in the market.

“2019 is off to a great start as evidenced by the strong demand and activity we are already seeing in the market,” Grove said. “The challenge will be the availability of existing product to meet this demand. With over 10 million square feet of net absorption in 2018, and the significant depletion in the speculative building supply, we will see a rush by developers to secure zoned, infrastructure-served sites for the next wave of development.”

The pace of absorption is expected to slow, according to Sims, at least until speculative construction can catch-up with the ever increasing demand.

With Louisville’s proximity to Interstate 65, the city has been a major distribution markets for more than 200 years, according to Grove. Its location allows companies to access two-thirds of the US population within a day’s drive. Additionally, the city boasts the third busiest air cargo hub in North America, and the seventh busiest in the world.

The air and land advantage means a wide variety of companies are looking to locate in the area.

“Automotive, ecommerce, biotech, pharmaceutical, electronic repair and retailers will continue to select Louisville for new facilities,” Grove said.