Which local county is now the top submarket for industrial spec space, deliveries?
The Silverman Group is building a 411,000-square-foot shell building at Concord Airport Business Park in Cabarrus County.
Cabarrus County has emerged as the top submarket in the Charlotte region for industrial speculative construction as well as new deliveries.
That’s according to a recent report by the local office of Avison Young, which says 2.4 million square feet of new construction is underway, accounting for about 30% of the market right now — approximately 6.4% of that is preleased. About half of new construction projects there are also being funded by equity from outside the local market, speaking to the submarket’s strength and desirability.
“Once the remaining spaces are occupied in Beacon (Partners’) Metrolina Park, tenants looking for modern space will be driven to the Cabarrus submarket, thus bolstering their absorption forecast for 2019,” the report says. “The meager go-forward pipeline will limit growth in the submarket while potentially driving up rates.”
Charlotte-based Beacon, which is developing the seven-building, 1.8 million square foot Metrolina Park in Charlotte’s north submarket, has seen good leasing activity as it delivers in phases, with tenants like Bonded Logistics, Premium Vision, Tosca and Veritiv Corp., which recently opened its 300,000-square-foot space at 4901 Gibbon Road within Metrolina Park.
Looking ahead, Avison Young predicts deliveries here within the industrial sector will only continue to increase, predicting an uptick of 14% in 2019 compared to this year — “solid but not excessive.” Avison Young says other areas seeing good industrial activity include the airport, north, stateline and York County submarkets.
But the report notes that because so much land is getting snapped up in core submarkets, and prices are going up, investors are having to look farther out for opportunities — in some cases, it’s a natural progression of a desirable submarket, but it’s also considered risky to be too much of a pioneer.
“Being too far removed from the core market is risky business but that will be the question many developers will face in the coming years,” the report says. “When assessing parcels near the outer limits, developers should look for those sites that are natural extensions of an existing submarket.”
It cites Gaston County as a natural extension of the airport submarket and Cabarrus as the next frontier after the north submarket. Because north is becoming land-constrained, Avison Young says, rates there are expected to rise and continue to propel more demand in Cabarrus, where absorption rates are projected to accelerate.