Jun 21

Triad Q1 Industrial Market Report

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Market Performance

New corporate locations, expansion projects and current development activity are illustrative of a significant momentum underway throughout the Triad. The region boasts excellent connectivity to the country’s most important transportation routes, and is well positioned to capitalize on the growth of e-commerce.

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Vacancies remain near record lows. The market’s 21Q1 average vacant available space rate of 4.8% is 460 basis points below the 10-year average quarterly rate of 9.4%.

q1 industrial report 2021 apg advisors

Leasing demand is driven by retail and manufacturing sectors and focused on sites along I-40 and I-85.

q1 industrial report 2021 apg advisors

The market realized 495,535 square feet of positive net absorption in 21Q1. Direct asking rents average $3.79 per square foot, representing a 10.8% increase over five years, and 27% increase over ten years. We are seeing the highest asking rents, an average of $5.03, in the Airport submarket, the largest of the Triad submarkets housing 21% of the market’s inventory. Fast-growing Alamance County is also experiencing significant rent growth; an increase of 43% over five years.

total square footage by submarket q1 industrial market report triad carolina apg advisors

New construction and development activity is at a record high. Approximately 583,000 square feet was added to the market in 21Q1, and another 2.1 million square feet is under construction with planned delivery by or before year-end; potentially 3.5 times the 10-year average annual volume of deliveries.

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State-supported economic development project wins of 2020 include Canada-based furniture manufacturer, PrePac Manufacturing, which will occupy 260,000 square feet at the Rock Creek Center in East Guilford once the property delivers in 21Q4. Belgian-based Ontex Group will occupy 254,000 square feet at South Rockingham Corporate Park in Stokesdale, also planned for delivery in Q4. Another notable lease transaction was executed by Rhode Island-based textile manufacturer, Cranston Print Works Company, which has signed on to 110,000 square feet at 780 Pegg Road in the Airport submarket, a newly delivered warehouse property built by Scannell Properties.

Sale Transactions

There have been seventeen individual industrial properties of an average of 280,000 square feet sold in the last 12 months for a combined $202.2 million, or $42.55 per square foot.

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Notable property sales include:

  • Nestle Purina Petcare Co. purchased the former MillerCoors Brewery in Eden for $18.86 million. Nestle plans to invest $450 million to redevelop the property into a 1.3 million square feet manufacturing plant for pet foods. The facility is expected to be operational in 2022, eventually employing over 300.
  • The 1.5 million square foot former K-Mart distribution center situated on 94 acres on Penry Rd in East Guilford, was sold to NFI Industries for $74 million, or $47.84  per square foot. NFI Industries, a third-party supply chain solutions provider, had been leasing the facility in its entirety since 2016. The seller, a joint venture between Pacer Partners and Drake Real Estate Partners, originally acquired the property in March 2019 for $44.75 million.

Notable land sales include:

  • Chick Fil A purchased 79 acres on Park Center Drive in Mebane for $3.9M, or $49,500 per acre. Alamance County earned the project win after beating out Ohio, Indiana and Texas. Chick Fil A’s planned $52 million investment includes the construction of a new 182,000 square foot facility to be used for both cold storage and vehicle maintenance. The distribution center, which will employ 160, will support 175 restaurants regionally.
  • FedEx purchased a combined 25 acres on Old Greensboro Road in Kernersville for $4.98 million, approximately $19,904 per acre. The land is adjacent to the existing FedEx 493,000 square foot distribution facility at 1544 Old Greensboro Road. No plans for expansion have been announced.

Sources: Costar Group, Real Capital Analytics, Greensboro-High Point Economic Development, Economic Development Partnership of North Carolina, NC Commerce

Download the full report below.