3rd Quarter 2017 Hotline
by Joe A. Hollingsworth, Jr.
At the end of the first quarter in 2017, the US industrial market has really never been stronger. Specifically, only 5.4% of the nation’s industrial space was vacant; and, it turns out that this percentage is the lowest rate on record. Even though new construction slowed down at the end of 2016, there was almost 60 million square feet of new supply that was completed and absorbed in Q1 2017. This is a tremendous record.
Market rents for higher quality space are averaging above $6.00 PSF; and, as we have written before with the ridiculous new EPA enforced energy codes and drainage codes adopted by several states, they are affecting new construction prices dramatically. We predict that rents will average $6.40 PSF nationally by the end of the Q1 2018.
So, where is all the space demand coming from?: 1) The onshoring of companies is accelerating because of the current administration’s jawboning and trade policies; 2) the House of Representative’s proposed Border Adjustment Tax; 3) Monies needing to flee the “China bubble”; 4) the incremental increase of demand for products that are currently made in the US; and, 5) a burst of innovation in retailing and logistics.
A case in point on the President’s trade policy working is that out of 30 years of showing industrial property up to December 1st, 2016, we had only seen one Chinese company express any interest in the Southeast. However, since January 1st, we have had four specific serious Chinese interactions. These range from 90,000 SF up to 300,000 SF. Two of the Chines companies openly said that the reason they are moving is that they have been making the same product in China for over twenty years, and they read the “handwriting on the wall” and are now going to have their first American footprint. Some on the “left” would say this is coincidence. However, instead, this is real hard, tangible evidence that a seismic shift is occurring and increasing the pace of onshoring which is bringing high-paying manufacturing jobs back to America.
Another observation relating to the above list of reasons that space is being “taken down” at such a rapid rate is the supercharged innovation cycle that always follows an economic crash, slow recovery, or a period of overregulation (which in this case we have all three). The supercharged innovation that we are seeing is technology combined with a slight shortage of labor. Ingenuity is creating this cycle of supercharged innovation causing “reconfiguring” in ways we currently make products using new composite materials creating new products and the need for space.
I think the next twelve years are likely to be the best sustained period in our economic lives. Speed bumps will occur; however, this will be like the Reagan/Clinton years, only on steroids.
The Hollingsworth Companies break ground on 108,960 SqFt Industrial building in Huntsville, Alabama
Huntsville, AL – July 18, 2017 - The Hollingsworth Companies broke ground on their sixth industrial building project in SouthPoint Industrial Park, Alabama on July 18th. This is the second facility started within the last 2 months and is a replacement for a building that was leased early this month. The 108,960 SqFt class A steel building, with 32’ clear height and LED lighting is suitable for warehouse or manufacturing space.
Tommy Battle, Mayor of Huntsville stated ”The timeline for industrial development projects is becoming quicker because companies want to be in business as fast as they can. Clearly there is demand in Huntsville for industrial facilities and we are sure that this trend will continue as more businesses learn Huntsville is an ideal location to make them successful. This new facility will be a welcome addition to the available inventory in Huntsville.”
“Limestone County Economic Development Association (LCEDA) is very happy to see that the Hollingsworth Companies is adding another building (108,960 sq. ft.) to the SouthPoint Business Park in Huntsville, Limestone County, Alabama. The park has great visibility from Interstate 65 and Interstate 565 and has all utilities in place including high speed fiber. We are pleased to continue our long term relationship with Hollingsworth and look forward to helping bring occupants to the building” added Tom Hill, President of the LCEDA.
In addition to the two buildings in Alabama, The Hollingsworth Companies have completed a 126,000 SqFt building in Andersonville, TN, started an 85 acre expansion of SouthPoint Business Park in Mocksville, NC and plan to start construction of a 108,960 upon completion of the park expansion. Joe Hollingsworth, CEO of The Hollingsworth Companies stated “We are continuing to see an improvement in the real estate market as government regulations have been rolled back. This improvement is all a result of increased manufacturing numbers and continued confidence in the economic recovery.”
The SouthPoint Industrial park is located adjacent to the I-65 and I-565 interstates, between Nashville, TN and Birmingham, AL. This location provides quick access for companies that want to be centrally located in the Southeast manufacturing corridor. The SouthPoint Park, Alabama was designed for companies that support the Red Stone Arsenal, Army Contracting Command; NASA’s Marshall Space Flight Center; and the Southern Automotive corridor.
The Hollingsworth Companies have already delivered 60+ projects throughout the southeast to various clients and sees the pace of this picking up again. The projects include Build-to-Suit and Finish-to-Suit projects ranging in size from 85,000 square feet to 400,000 square feet.
About The Hollingsworth Companies
The Hollingsworth Companies are the largest non-urban Industrial Real Estate developer and construction firm in the southeastern United States with 125 tenants, eighteen million square feet of industrial space, spread over 17 states. Facilities are strategically located in Alabama, Georgia, Mississippi, North Carolina, South Carolina, Tennessee, and Virginia. For more information about The Hollingsworth Companies, contact, Tom Mann, Senior Vice President of Industrial Real Estate, at 865.457.3701, email@example.com.
The Hollingsworth Companies