“Speculative industrial development in Louisville, Kentucky, has been at a standstill for the last 18 to 24 months,” says Phil Charmoli, industrial brokerage advisor with Grubb & Ellis|Commercial Kentucky. “There have been some build-to-suits and owner-user projects completed during this period of time.”

Several significant industrial developments have ground available for construction of new bulk buildings when the timing is considered better. Approximately 4 million square feet of bulk space is available in the market today, which is a 2-year inventory for this market in good years. It is unlikely any new speculative construction will occur until some of this current space gets absorbed.

“All of these developments have the infrastructure and utilities in place with good interstate access,” Charmoli notes. “Louisville is in a good position for growth for the foreseeable future.”

Most of the industrial development has been taking place in south Louisville and Bullitt County. The expansion of utilities and infrastructure in these areas has made land available for development. Most of these developments are near the airport and the major United Parcel Service (UPS) air-hub, which are ideal locations for future development.

Landlords are trying to attract companies with high employment and high-paying jobs. However, warehouse/distribution users are absorbing the majority of the bulk space. In 2002, these major tenants absorbed a significant amount of space (deals of 100,000 square feet or more):

• Teleplan – 185,000 square feet, ProLogis Park 265
• Walsh Dohman – 122,000 square feet, Kingbrook Commerce Center
• Exel Logistics – 195,000 square feet, Airspace II
• Alcoa Fujikura – 140,000 square feet, Dixie Properties
• APL Logistics – 182,000 square feet, Cedar Grove Business Center
• Solectron Corporation – 240,000 square feet, build-to-suit, Commerce Crossings
• Union Tools, Inc. – 302,500-square-foot lease, Louisville Logistics Centre

UPS customers also continue to absorb space in Louisville.

Net rental rates for bulk buildings have come down over the last 2 years. A new, tilt-up concrete building with a 28- to 32-foot clear ceiling height and ESFR would range between $3 and 3.25 per square foot. Second generation buildings would rent between $2.75 and $3 per square foot.

Phil Charmoli is an industrial brokerage advisor with Grubb & Ellis|Commercial Kentucky.


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