CBRE: San Antonio Has Emerged As A Southwest Logistics Hub

Investors Are Targeting San Antonio For Industrial & Logistics Real Estate Opportunities

Fourteen U.S. markets, including San Antonio, stand out in a new report from CBRE as strategic options for investors in industrial & logistics real estate who are seeking growth opportunities outside of primary markets.

These markets, which CBRE describes as strategic markets, have registered demand for industrial & logistics real estate that outpaced their supply by a collective 89 million sq. ft. since 2013. In the same span, their industrial rents have increased by an average of 25.2 percent.

San Antonio has emerged as a logistics hub for the Southwest region. In San Antonio, new completions have helped relieve the tight vacancy rate. Even so, demand still slightly outpaces supply, with approximately 8.5 million sq. ft. of completions and 9 million sq. ft. of absorption since 2013. Overall, the market has seen an average rent increase of 5.6% over the past year, well above the national average of 4.3%.

“For industrial and logistics users, San Antonio has emerged as a strategic location due to its proximity to the border and the larger Texas metros,” says Rob Burlingame, First Vice President at CBRE in San Antonio. “We’re seeing a combination of factors here. Long-standing distribution tenants are growing and expanding, and we are also seeing an influx of new tenants coming to the market. In addition, San Antonio continues to have a large industrial labor pool and a stable economy, making it an attractive market for manufacturers and distributors.”

“The Industrial & Logistics sector continues to generate strong momentum with the growth of e-commerce and a healthy U.S. economy, but opportunities vary depending on geography, asset type and other factors,” said Jack Fraker, Vice Chairman and Managing Director of CBRE Global Industrial & Logistics. “Investors seeking higher yields can find them in several markets still hitting their stride as hubs. These markets offer the infrastructure, labor availability, connectivity to major ports, and the real estate fundamentals needed to support strong growth going forward.”

Leading these strategic markets are seven that report industrial vacancy rates below or only slightly above the national average (4.3 percent) and aggregate rent growth of 6.1 percent in the past year: Las Vegas, Salt Lake City, Milwaukee, Reno, St. Louis, El Paso and Detroit. The other seven have more new leasing opportunities due to construction completions, and they generated an average rent increase of 5.6 percent: Greenville-Spartanburg, S.C.; Dayton, Ohio; San Antonio; Savannah, Ga.; Central Valley, Calif.; Northeastern Pennsylvania; and Phoenix.

CBRE selected these strategic markets after polling its Industrial & Logistics Capital Markets teams about which markets represent emerging opportunities and opportunities for yield for investors. Some, like Detroit and Phoenix, are primary markets in terms of population but still are coming into their own as hubs of industrial & logistics real estate.

CBRE’s report includes details on each of the 14 markets, such as the friendly business climate of Reno, the relatively affordable labor and business costs of Greenville-Spartanburg, and the proposed, 20,000-acre inland port adjacent to Salt Lake City. To read the report, click here.