As we reach the halfway point in 2017, absorption has topped one million square feet. Commencement of leases by Fairfield Manufacturing, XPO Logistics, and Quiet Logistics added almost 800,000 square feet of occupied space in the second quarter. Growth in the industrial market is also adding jobs; employment in transportation and warehousing is up 16.1 percent since the middle of 2010. With new product and tight conditions, asking rates are up 7.3 percent from this time last year.
The two largest vacancies in Gateway Commerce Center were leased this quarter. Geodis took all of Gateway 624 (624,000 square feet), and DB Schenker (306,000 square feet) will expand into the rest of Gateway 520. Both leases will commence later this year. As a result, another building broke ground in the park, Gateway 595, which will deliver near the end of 2017.
With at least another 1.7 million square feet of new leases set to commence in the second half of the year, we expect absorption to reach three-million square feet in 2017. While this will be below the previous year, it is almost double the 10-year average. We also project almost 5.5 million square feet of new construction completing in 2017; a majority of it is modern bulk warehouse space. Combined with last year’s record construction, the market will have added 11 million square feet of new product in two years, another record for St. Louis.
eDespite flat employment in manufacturing, data from the Federal Reserve says otherwise. Almost two-thirds of manufacturing contacts surveyed are expecting increases in production, new orders, and capacity utilization over the next year.