By Matt Mowell, Jamie Portolese, Franz Limoges, Dennis Schoenmaker, Ph.D.
It is widely believed that Industrial real estate clusters along highways. We analyzed metro Atlanta, an important logistics hub serviced by multiple interstates and state highways, to test this hypothesis.
We divided the market based on proximity to highway access ramps. We then labeled all census blocks that contain an on-ramp as Zone 1, tracts adjacent to this first zone as Zone 2 and the rest of the market, which is not adjacent to a tract containing an on-ramp, as Zone 3.
We then overlaid the industrial buildings in each zone. Interestingly, just over half of Atlanta’s industrial stock was packed into Zone 1, which accounts for just over 10% of the metro’s land area. This zone appears to be getting increasingly crowded. Of the 50 million sq. ft. constructed in metro Atlanta during the past 10 years, 63% was built in Zone 1, with Zone 2 accounting for 25% and Zone 3, 12%.
Industrial properties in other major logistics hubs also cluster around on-ramps. Dallas and Riverside have 71% and 75% of their industrial inventory located in Zone 1. Markets where the clustering effect is less pronounced tend to be smaller cities with few interstate highways, such as Austin. Less than half of the industrial space in older, more densely populated markets, such as Boston, Philadelphia and Chicago, is clustered in Zone 1. Indeed, some inventory in these cities predates the federal highway system.
Please reach out to your Client Care team for a more in-depth look at the clustering of industrial properties in major metros.