Industrial Developers Are Still Moving on New Projects

Industrial development is still moving forward in top markets. Despite the market change catalyzed by the pandemic, developers haven’t made any major strategic adjustment. Duke Realty is a prime example. The firm recently broke ground on a 1.2 million square foot logistics facility in Southern California, and the property is just one in an active development pipeline.

“We are always actively developing in the top 20 logistics markets in the U.S. Our highest priority has and will continue to be in the high barrier coastal tier one markets like south Florida, New Jersey, southern and northern California and Seattle. More than 80% of our land bank for development going forward is in these markets,” Jim Connor, chairman and CEO of Duke Realty, tells GlobeSt.com. “Additionally, as rental rates continue to rise in the coastal markets we have targeted for growth, we believe there is potential to achieve yields higher than our initial underwriting for the speculative portion of our development pipeline.”

Duke Realty currently has 3.1 million square feet of industrial product under construction in Southern California alone. “Southern California is one the coastal tier one markets where we are making significant investments,” says Connor. “Our plan is to remain steady in our measured approach to investments in coastal tier one markets while considering infill opportunities.”

Outside of Southern California, Duke is focused on Chicago, San Francisco, Seattle, Atlanta, New Jersey and South Florida. “At last count, we had done over $2 billion of infill redevelopment. Many of the facilities are, in fact, last mile facilities for clients like Amazon, UPS and FedEx,” adds Connor.

New construction industrial facilities that offer state-of-the-art features and high clear heights are in the highest demand. “Our clients are looking for modern, efficient distribution facilities with highly desirable proximity and convenience to major trucking thoroughfares,” says Connor. “Our 1.2 million-square-foot speculative development located at 728 West Rider Street offers just that. More than 30% of Duke Realty leasing and development activity is ecommerce related and we do not anticipate a slow down any time soon,” says Connor. “We are experiencing leasing momentum with limited large box space. So, this is the time for us to move forward on developments like the 728 West Rider Street project.”