The Class A warehouse sector in industrial commercial real estate remains one of the hottest assets in northeast Ohio and across the country. Class A industrial warehouses are defined as buildings with an area of 100,000 square feet, with a minimum internal ceiling height of 24 feet and have been built since 2000.
The Cleveland Class A warehouse market is 18.7 million square feet, which is 6.4% of the total industrial market in Cleveland. Typical users or industries of these types of equipment are e-commerce, distribution and logistics companies.
In the fourth quarter of 2021, the Cleveland Class A warehouse market had an vacancy rate of 8.5%, slightly more than the 5.0% vacancy rate in the overall market, although this asset class remained stable and desirable and was affected by only one or two large unoccupied seats.
Industrial real estate under construction at the end of the year amounted to more than 3.5 million square feet, and if you include planned projects, the number is more than 6.5 million square feet, most of which are Class A warehouse / distribution assets. and e-commerce and logistics distribution facilities continue to be the highest asset classes on the list. Cold stores are also emerging as facilities that developers and tenants are considering to meet the consistent demand for pandemic food supplies.
One of the innovations that took place last quarter was the developers Weston Inc., Scannell Properties and DiGeronimo Cos. 2.1 million square feet. Walton Hills.
Newmark’s national research team reports vacancy has dropped to an all-time low of 4.3% and each market has seen single-digit vacancy. Some of the most important logistics hubs in the country are almost vacant and the vacancy rate is below 2.0%. In fact, new speculative warehouses were leased in 2021 on average for less than a quarter after delivery – with many pre-leases before completion. One wrinkle of this unprecedented demand is that there is a shrinking area for industrial development at the national level, so that developers are forced to think beyond the scope of expansion.
Terry Coyne is the vice president of the Cleveland Commercial Real Estate Services Office, Newmark.
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