The Top 10 Emerging U.S. Industrial Markets to Watch in 2022

The Momentum Behind Industrial Assets Doesn’t Appear To Be Slowing Down Any Time Soon.

The U.S. industrial market posted record gains in occupancy, rental rates and construction activity to close 2021, and the market’s momentum doesn’t appear to be slowing any time soon.

The surge in e-commerce has convinced institutional investors to keep snapping up land in key industrial corridors, pricing out smaller players. In one established market alone, Dallas, there are 60 million square feet of industrial space in the construction pipeline.

Challenges can present new opportunities, however. Many identified 10 emerging U.S. industrial markets to watch this year. Meant to identify yield opportunities for investors and expansion opportunities for occupiers, the reports uses four key metrics as of the end of 2021 to outline these up-and-coming markets:

• Vacancy Rate
• Net Absorption
• Construction Pipeline
• Asking Rental Rates

Based on these criteria identified the top 10 emerging U.S. industrial markets to watch in 2022:

• Austin, Texas
• Charleston, South Carolina
• Greenville-Spartanburg, South Carolina
• Las Vegas
• Norfolk, Virginia
• Reno-Sparks, Nevada
• Sacramento, California
• Salt Lake City
• Savannah, Georgia
• Stockton/Central Valley, California

Additional information given to shows how much industrial space under construction in each of these areas is speculative development.

Austin, Texas

Rapid population gains and major manufacturing relocations led by Tesla and Samsung, among other companies, have driven historic industrial growth in the Lone Star State’s capital. These trends are now supporting larger bulk distribution facilities in the area, and in particular, the Austin-San Antonio corridor.

• Vacancy: 3.1%
• Absorption: 6.2 million square feet
• Construction: 2.7 million square feet
• Speculative: 95%
• Triple-Net: $12.70 per square foot

Charleston, South Carolina

Charleston’s Hugh K. Leatherman Terminal was the first new U.S. container terminal to deliver in over a decade when it opened in March 2021. These port enhancements are forecast to increase capacity 51% by 2033, according to the South Carolina Ports Authority.

• Vacancy Rate: 3.7%
• Absorption: 5.7 million square feet
• Construction: 4.8 million square feet
• Speculative: 80%
• Triple-Net: $7.05 per square foot

Greenville-Spartanburg, South Carolina

While Charleston is expanding its coastal port, Greenville-Spartanburg’s inland port in Greer, South Carolina, is emerging as the Palmetto State’s transfer hub to the rest of the country. This market is located squarely in the growing “Charlanta” southern megaregion, with about 100 million consumers within a day’s drive.

• Vacancy Rate: 4.8%
• Absorption: 7.1 million square feet
• Construction: 4.8 million square feet
• Speculative: 90%
• Triple-Net: $3.71 per square foot

Las Vegas

Vegas isn’t just a tourist destination. It’s also ideally situated from a logistics standpoint, with proximity to the ports of southern California and the growing Phoenix metropolitan area. In addition to several nearby interstates and competitive tax structure, southern Nevada has a rapidly growing population.

• Vacancy Rate: 2.4%
• Absorption: 11.7 million square feet
• Construction: 6 million square feet
• Speculative: 100%
• Triple-Net: $11.14 per square foot

Norfolk, Virginia

Amazon alone has moved into Norfolk in a big way, with the e-commerce giant now occupying approximately 5 million square feet of industrial space in the market. Norfolk is the sixth-largest container port in the United States, and cargo flow rose 25% last year.

Congestion at the ports of Los Angeles and Long Beach, California has led to many shippers sending more freight to the East Coast. A harbor deepening project at the Port of Virginia is expected to deliver in late 2024.

With available space at just 1.2%, this new supply of warehouse and distribution facilities is sorely needed to keep the port growing.

• Vacancy Rate: 1.2%
• Absorption: 5.3 million square feet
• Construction: 1.8 million square feet
• Speculative: 81%
• Triple-Net: $7.29 per square foot

Reno-Sparks, Nevada

Reno is strategically located in the heart of the American West, with seven different states and 60 million people within one day’s drive. The cross-country Interstate 80 runs through Reno, and the cost of business is low compared to neighboring California. Vacancy rates are at an all-time low among the area’s 100 million square feet of industrial space.

• Vacancy Rate: 1.1%
• Absorption: 5.7 million square feet
• Construction: 5.8 million square feet
• Speculative: 95%
• Triple-Net: $8.18 per square foot

Sacramento, California

Sacramento’s affordability compared to the Bay Area has resulted in a population boom since the start of the pandemic. This has led to rising industrial activity despite California’s population declining for the first time in 2020. As the Bay Area runs out of land to develop, many occupiers are relocating to or expanding in Sacramento due to its central location and relative affordability.

• Vacancy Rate: 4.7%
• Absorption: 6.4 million square feet
• Construction: 3 million square feet
• Speculative: 68%
• Triple-Net: $8.25 per square foot

Salt Lake City

Salt Lake City is located at the confluence of two major interstates: I-80, and Interstate 15, which is a major thoroughfare from Canada to Mexico. The area is also the first rail intersection between all major West Coast seaports, and the Utah Inland Port Authority is currently developing a new major transload facility. Nearly all major cities west of the Mississippi can be reached within 18 hours on the ground, and Utah consistently ranks as one of the best states for business.

• Vacancy Rate: 1.7%
• Absorption: 9.5 million square feet
• Construction: 13.2 million square feet
• Speculative: 90%
• Triple-Net: $8.41 per square foot

Savannah, Georgia

The fastest-growing and third-largest port in the United States calls Savannah home. Many shippers have expanded or relocated entirely to Savannah in recent years as pricing in ports such as New York and Los Angeles remain high. The Port of Savannah moved a record volume of cargo in 2021 and that figure should push even higher in the future. Savannah tops the nation in total industrial space under construction as a percentage of total inventory, among markets with more than 75 million square feet of industrial space.

• Vacancy Rate: 2.3%
• Absorption: 8.3 million square feet
• Construction: 17 million square feet
• Speculative: 66%
• Triple-Net: $5.10 per square foot

Stockton/Central Valley, California

The Port of Stockton is the largest inland port in California, spanning 4,000 acres and more than 7.5 million square feet of warehouse space. It’s also situated near four major freeways, two transcontinental railroads and the San Joaquin River, which connects to the San Francisco Bay. The entire West Coast can be reached within a day.

• Vacancy Rate: 6.0%
• Absorption: 6.5 million square feet
• Construction: 5 million square feet
• Speculative: 91%
• Triple-Net: $7.56 per square foot