Third-party logistics firms helped fuel a strong finish to 2020 for the Des Moines area industrial market, according to the latest research from CBRE|Hubbell Commercial. The company’s fourth quarter industrial snapshot said that the overall vacancy rate, asking rents and net absorption all rose during the last three months of last year, despite — or partially because of — the COVID-19 pandemic.
It’s no secret by now that the industrial market enjoyed another boom year in 2020, even during the worst days of the pandemic. Consumers, wary of shopping in person, took to the Internet to buy groceries, cleaning supplies, clothing and other products. This only increased the demand that companies had for warehouse and distribution space.
The Des Moines market was no different. While many commercial markets here struggled last year — retail, entertainment, hospitality, office — industrial enjoyed a busy year.
According to CBRE’s report, the vacancy rate for the Des Moines area industrial market fell to 5.4 percent in the fourth quarter, a drop of 70 basis points. Asking rents for warehouse and distribution space rose to an average of $5.38 a square foot. And the market saw 451,480 square feet of net absorption during the fourth quarter.
The only metric that saw a dip was new construction. CBRE reported that 84,600 square feet of industrial space was under construction as of the fourth quarter of 2020.
The solid fourth quarter capped off a strong industrial year for the Des Moines area. According to CBRE’s report, the greater Des Moines industrial market recorded 1.2 million square feet of speculative deliveries in 2020, increasing the overall competitive inventory by 2 percent. Despite this surge in new supply, vacancy for the year increased by just 1 percent as the market absorbed about 50 percent of 2020 completions by the end of the year.
The absorption gains in the fourth quarter took place largely in the Northeast submarket of Des Moines, which saw 535,617 square feet of positive absorption and accounted for the top three leases of the quarter. The significant expansion of activity in this submarket can be attributed to the rapid expansion of 3PL company JT Logisitcs, which leased 447,000 square feet in the fourth quarter.
Four speculative projects totaling 217,400 square feet also delivered in the fourth quarter, reducing the spec construction pipeline to 84,600 square feet. The Northwest submarket accounted for 68 percent of fourth quarter deliveries.
Investment activity was strong in 2020, too, up 64 percent in total sales volume and 44 percent in the number of transactions year-over-year. There were four transactions of more than $7 million in the fourth quarter, the most notable of these being the Atlantic Bottling headquarters, which sold to an investment firm in Austin, Texas, for $31.5 million.