Norm Khoury SIOR, CCIM
Q2 Insights on the Industrial Real Estate Market Nationally, and in Ohio
May has been the month of great conferences. This month I attended both the Colliers Logistics & Transportation Solutions (L&T) Group conference in Las Vegas, Nevada and the SIOR 2023 Spring Event in Montreal. At both events industrial leaders met to attend educational sessions and discuss the latest emerging markets and supply chain trends. Here are my takeaways and new insights on the industrial market:
The big message is that nearshoring will continue for 5 more years. Therefore, so will the industrial demand.
Activity in larger BULK spec building segment has been slow all year all over the US. However, the smaller building product type of less than 200,000 SF is where the majority of activity continues.
This is true of our activity from Cincinnati/NKY, Dayton to Lima Ohio.
The Capital Markets Teams are still experiencing uncertainty and pricing discovery. However, they expect to be more active in Q3-Q4 2023, as the interest rate increases and inflation curtail. As such while demand for land has flattened in 2022 and 2023, we expect to see activity rise again.
“Chips are the New Oil”: “The locations of oil reserves has defined geopolitics for the last 5 decades…..where the semiconductor factories are located in the next 5 decades will be even more important.” - Pat Gelsinger, CEO of Intel
Additionally, over the last quarter I’ve spent time meeting with economic development teams in cities across Southwest Ohio.
Ohio is particularly well-positioned for growth, given the investments from leading companies in the EV and Semiconductor industries:
Intel is investing more than $20 billion in the construction of two new leading-edge chip factories in Ohio to boost production to meet demand for advanced semiconductors, power a new generation of innovative products from Intel, and serve the needs of foundry customers.
GM is investing $760 million in their Toledo plant to make EV propulsion units
In May of 2022 SEMCORP Advanced Materials Group announced Thursday it will establish a manufacturing facility in Sidney, Ohio, creating nearly 1,200 jobs with $73 million in annual payroll and $916 million in capital investment.
In February of 2023 Honda and LG Energy Solution held the official groundbreaking ceremony for a new joint venture EV battery plant over 2 million square feet in size, in Fayette County, near Jeffersonville, Ohio.
Additionally, Honda is investing a total of $700 million will be invested by Honda to retool its Marysville Auto Plant in Union County, Anna Engine Plant in Shelby County, and East Liberty Auto Plant in Logan County
In 2022, Ultium Cells, LLC opened their 2.3 MM SF production facility located in Lordstown, Ohio. The facility is responsible for mass producing battery cells for GM’s electric vehicles.
As a result of announcements such as these in Ohio, we’re starting to see:
Suppliers to the EV and semi-conductor industries searching for buildings and land within a 30 minute to 2-hour radius of these facilities.
Demand for existing manufacturing buildings rise and very little
Increased demand for housing and rising activity from residential developers
Shortages in building materials as these massive projects break ground
In the fall, I’ll attend another round of conferences and I suspect we’ll know a little more about the economy. Stay tuned for another update then!