Industrial real estate investments across the US are in demand, despite the threat of a potential recession. Even amidst economic uncertainty, there are 7 cities that have particularly strong outlooks for their industrial real estate markets.
The industrial sectors of these cities have seen strong performance throughout Q4 2022 and Q1 2023, and analysts are predicting this performance to continue into 2023.
Let’s take a closer look at the numbers.
#1 – Philadelphia, PA
Philadelphia is home to dozens of big-name companies, like PepsiCo, Sherwin Williams, Estée Lauder, and many more. These companies flock to Philadelphia for its prime location on the East Coast, which makes it an attractive location for manufacturing and warehousing companies.
In Q1 2023, nearly a quarter (24%) of industrial real estate properties currently under development in Philadelphia have been pre-leased, due to increasing demand for warehouse space in the area creating greater competition between tenants looking to lock in storage and operating space.
#2 – Houston, TX
Houston is home to many logistics companies with a need for large warehouses and industrial facilities. Demand for industrial real estate in Houston continues to climb, as more companies move to or expand within the area.
In Q1 2023 alone, almost 7 million square feet of industrial space were delivered, driven by this higher demand that can likely be attributed to a shifting supply chain.
Despite healthy competition, the industrial vacancy rate in Houston remains stable at 5.9%.
#3 – Baltimore, MD
In Baltimore, demand for industrial real estate has continued to outpace supply. Manufacturing and warehousing companies, like Faropoint and Northrop Grumman, have a large presence in the area.
So far in 2023, the strongest absorption of properties has been in the Washington-Baltimore metropolitan area as well as in Anne Arundel County. The largest industrial real estate transaction in Q1 2023 was by Global Trading Unlimited, a furniture wholesaler: The company closed on a 130,000-square-foot lease.
#4 – Dallas, TX
Dallas is currently one of the strongest commercial real estate markets in the U.S. According to the Dallas Morning News, it’s the “most favored” metropolitan area for commercial real estate deals.
In Q1 2023, industrial jobs rose by more than 11%, with new jobs in manufacturing, warehousing, and wholesale trade. This can be attributed to a high demand for industrial space in the area, also causing historically low vacancy rates and permitting property owners to charge higher rent prices to tenants.
#5 – Nashville, TN
In Q4 2022, vacancies for Nashville’s industrial real estate were some of the lowest in the country. In the same quarter, Nashville recorded over 1.7 million square feet of industrial space leased, bringing the year-to-date total to more than 8.8 million square feet.
You’ll find more affordable price tags on industrial real estate in Nashville than you will in other areas of the country, so properties don’t stay on the market for long. But the deals that do surface are often lucrative and highly sought after.
#6 – Boston, MA
Boston has a diverse economy of businesses, from biotech to medicine to retail, feeding into a region-wide need for industrial warehousing and manufacturing facilities. Areas like Charlestown and South Boston are booming with industrial real estate space for commercial real estate buyers looking to invest in the area.
In Charlestown alone, there are over 200,000 square feet of industrial real estate space. One of the spaces, Schrafft’s City Center, which is well-situated in the center of town, has over 115,000 square feet of available space.
#7 – Raleigh-Durham, NC
Commercial real estate in Raleigh-Durham has shown strength in the first months of 2023, despite the recent economic downturn. The Raleigh-Durham commercial real estate market has nearly 100 million square feet of industrial space and, of that, less than 8 million square feet are available to buyers, placing the city’s industrial vacancy rate at around 3%.
Most of the city’s recent industrial activity has happened in the Eastern Wake County area, which is right outside the metro area of Raleigh-Durham. For example, logistics company DHL invested $8 million to open a new cold storage facility in the area.
