Fourteen U.S. markets stand out in a new report from CBRE, Los Angeles, as strategic options for investors in industrial and logistics real estate seeking growth opportunities outside of primary markets.
 
These markets, described as strategic markets, registered demand for industrial and logistics real estate that outpaced their supply by a collective 89 million square feet since 2013. In the same span, their industrial rents increased by an average of 25.2%.
 
“The industrial and 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,” says Jack Fraker, vice chairman and managing director of CBRE global industrial and 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.”
 
Las Vegas; Salt Lake City, Utah; Milwaukee, Wis.; Reno, Nev.; St. Louis; El Paso, Texas; and Detroit, Mich., lead these strategic markets, with industrial vacancy rates below or only slightly above the national average (4.3%) and aggregate rent growth of 6.1% in the past year. Meanwhile, Greenville-Spartanburg, S.C.; Dayton, Ohio; San Antonio; Savannah, Ga.; Central Valley, Calif.; Northeastern Pennsylvania; and Phoenix, offer more new leasing opportunities due to construction completions, and generate an average rent increase of 5.6%.
 
CBRE polled its industrial and 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 and logistics real estate.