The warehouse distribution market has been expanding locally and nationally over the past few years. But a new report shows multitenant distribution warehouse space could eventually thrive a little more than other sectors.
Multitenant distribution warehouse space, defined as space at or below 200,000 square feet with a 24-foot clear height, comprises 40 percent of the national footprint of 13.5 billion square feet, Cushman and Wakefield’s Multitenant Distribution Warehouse Segment in the U.S.: Outlook Summer 2016 report shows.
“Healthy demand and tight supply has made multitenant distribution warehouse among the best performing of all commercial real estate segments,” said Jason Tolliver, Cushman &Wakefield’s head of industrial research, Americas. “The historic and forecasted demographic and economic demand drivers indicate continued outperformance over both the short and long term.”
Growth in e-commerce shopping fulfillment channels is driving this expansion. Though most e-commerce wares are sent through large fulfillment centers, smaller divisions have become necessary, as the “last mile gap” servicer, the report said.
In the next couple of years, 7.4 million more square feet of warehouse-distribution sector are planned locally, said John Stater, research manager at Colliers International, Las Vegas.
In Henderson, Harsch Investment Properties broke ground on its 240,000-square-foot Henderson Commerce Center industrial project earlier in 2016, with divisibility options starting under 20,000 square feet.
City Redevelopment Grant gives historic building new life
LV.Net founder and CEO Marty Mizrahi, recently received a redevelopment grant from the city of Las Vegas to aid in bringing new life to a historic building at 800 S. Valley View Blvd.
The 19,000-square-foot structure, home of the Las Vegas Sun newspaper from 1990-2001, will have exterior improvements. The building houses a data center for LV.Net’s clients.
“We want to maintain the building’s historical value while improving it to meet modern design and technology standards,” Mizrahi said. “It’s great to have a building with this much history in the heart of Las Vegas.”
The city’s grant gave Mizrahi $50,000 for the project. The cost of the LV.Net exterior sign ran $200,000. Exterior upgrades are scheduled to be completed this year.
Panattoni DEVELOPMENT breaks ground on major industrial project
Panattoni Development Co. and Hillwood Investment Properties broke ground on a 482,000-square-foot speculative warehouse distribution facility — phase two of the 150-acre South 15 Airport Park in the Henderson Airport area.
“Logistically, the South 15 Airport Center is viewed as a new, emerging submarket in an ideal and superior location, given access to the neighboring FedEx Ground facility and its proximity of only 30 miles to the California border, where the majority of incoming product arrives from daily,” according to Dan Doherty’s Colliers International industrial team.
The project is expected to be complete in this year’s fourth quarter. Phase three will start around the third quarter of 2017, though it could start sooner depending on the leasing progress in phase two, a statement said.
The subsequent phase will include more than 680,000 square feet of space across four industrial distribution buildings, ranging from 91,000 square feet to 200,000 square feet. All buildings will be for lease or sale.
Construction business costs rise
Construction input prices rose by 1.1 percent in June from a month earlier, an analysis of the Bureau of Labor Statistics Producer Price Index released by the national Associated Builders and Contractors shows.
“Commodity prices stabilized in March and in many cases, including natural gas and oil, have been edging higher,” ABC Chief Economist Anirban Basu said. “Accordingly, construction material prices are now on the rise, which all things being equal translates into smaller profit margins. Alternatively, rising costs of construction may be passed along to owners of projects in certain instances.”
Construction materials prices remain 2.5 percent below the June 2015 level, despite an uptick in input prices. Nonresidential construction input prices rose 1.2 percent from May but were 2.6 percent lower than in June 2015.