Warehouse/Distribution Top & Bottom Markets: Effective Revenue Growth
The industrial sector was a bit sluggish in the first quarter of 2019, but a number of metros did show strong growth. The U.S. aggregate YoY effective revenue was 2.5 percent this quarter, the same figure as last quarter. However, the top five metros had growth rates of 5.0 percent or higher. San Antonio was among the bottom five markets last quarter as well, but its aggregate growth of -0.8 percent this quarter is not remarkably negative. San Antonio and Nashville were the only markets in the bottom five to have negative aggregate growth rates.
Effective Revenue Per SqFt, Percent Change 2018Q1 – 2019Q1
Source: Reis, Real Estate Solutions by Moody’s Analytics
The chart above ranks markets by their year-over-year effective revenue growth, which is calculated as the annual change of effective rent multiplied by the occupancy rate. On the left side of the chart, we have the five markets with the highest effective revenue growth, and on the right side, we have the five markets with the lowest effective revenue growth. The navy blue bars represent the metro-level growth rates, and the gray and teal bars represent the submarkets with the highest and lowest growth rates in the metro, respectively.
Industrial properties have the widest range of performance by far. The best-performing properties this quarter were in Chicago. In the sample used to create the chart (which excludes the top and bottom 10th percentiles of properties), there were almost 100 properties that had an effective revenue growth rate of 30 percent or higher in Chicago. About a third of those had YoY growth rates of over 40 percent. At the same time, though, Chicago had some of the worst performing properties on the chart. Roughly 50 properties had growth rates more negative than -10 percent. Even then, the properties with positive performance generally seem to outweigh the negatives.
Analysis by Shan Ahmed. Ahmed is an Associate in the Economics Department at Reis. He is responsible for the firm’s custom client projects and real estate portfolio analytics services. Shan holds a bachelors degree in Economics from The University of Texas at Austin
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