on Mar 08, 2019 11:03:46 AM

Industrial Growth Outlook for 2019

In 2019, industrial real estate is in tremendous demand in the Greater Des Moines area. The metro is officially “on the radar” as a distribution and industrial hub, competing with larger Midwestern cities – a trend not seen in recent history. From flexible, tech-space for incoming larger companies to adaptable, speculative space, the growth shows no slowing in sight.

Primarily, new industrial construction has seen the largest spike in the metros’ western suburbs including West Des Moines, as well as outer-reaching cities like Ankeny and Altoona. This high demand is due to tenants who are looking to purchase easily accessible properties from Interstates 35 and 80, have high visibility and a large footprint. These tenants are generally looking to expand their e-commerce business platforms and need more space to do so. For example, the Corporate Woods corridor in Ankeny is the new home to three new build-to-suit and owner-occupied buildings including Kreg Tool, Northern Tool and Ruan Transportation – a major win for the area.

Flex-tech spaces are the new hot topic in the industry world. The name means just that: flexible-technological spaces that allow the tenant to have customizable space for a retail or showroom presence. While 2018-2019 numbers continue to decrease due to some vacancies and relocations, new flex-tech construction continues to be built in various locations. This new inventory is due to owners becoming more willing to build larger warehouses in anticipation for larger tenant requests.

Hubbell Realty Company is currently building a 72,000 square foot building at Birchwood Crossing in Johnston in hopes the proximity to interstates and high visibility will draw a large tenant. A second identical phase is also planned for later in 2020. Other high-cube spaces include:

  • R&R’s 300,000 square foot Prairie Business Park III building in Grimes & 150,000 square feet available in Prairie Business Park building II
  • Graham Warehouse’s new 675,000 square foot, 24’ clear building at 4950 NE 29th Street. 

Overall, new product construction in 2019 will also not face a stalemate. Hubbell is constructing the fifth Grimes Distribution Center warehouse with 110,000 square feet of customizable space as well as a 130,000 high-cube building in Ankeny. By the end of May 2019, more than 1.4 million square feet of inventory will be coming online across the metro.

What stats show

Of the 34 million square feet of warehouse space and nearly 11 million square feet of manufacturing space, total occupancy remains around the 95 percentiles for warehouse and at a staggering 99.2% for manufacturing buildings.

Inflation of sales prices for vacant and income-producing industrial buildings will continue. Smaller-scale buildings, which are less than 20,000 square feet, will reach $60-$90 per square foot; while larger buildings, above 20,000, may average $50-$60 in some cases.

For more information on industrial construction and the CBRE Markey Survey results, please visit HERE.