We’ve already written about Louisville’s amazing industrial market — the city expects to see more than 3 million square feet of new Class-A distribution space in the next 18 months — but the influx of new industrial space is so unprecedented, it’s worth seeking out additional commentary.
Kevin Grove, senior vice president and partner with CBRE|Louisville, said that this city’s industrial market is now seeing historic growth. Never before have so many industrial facilities been either in construction or in planning at the same time here.
And Grove doesn’t think that brokers will have any problem filling this new space.
“I’ve been saying for three years now that we need new industrial space,” Grove said. For the last seven years, Louisville has been averaging each year a little more than 1.6 million square feet of net positive absorption in its industrial market. There was not a single year during the recession in which Louisville’s industrial market did not enjoy positive net absorption.
“I don’t know of many other markets that could say that,” Grove said.
The math, then, is simple, according to Grove. During Louisville’s peak building years in 2006 and 2007, the industrial market saw about 3 million to 4 million square feet in spec construction every year. That stopped in 2008.
“You can appreciate what happens then,” Grove said. “We are absorbing 1.6 million square feet a year. It doesn’t take very long for everything available to fill up, which is what happened. It’s why we are at such a low vacancy rate.”
The new industrial buildings should help boost that sector’s activity in the region, Grove said.
“We didn’t have large blocks of space available,” he said. “We didn’t miss out on all the big industrial deals. But potentially some of the large users interested in this region did not come here because we did not have buildings ready to be occupied in the time frames they needed. There is no question in my mind that we missed out on some industrial business because of this.”
