Currently in Louisville, an infusion of local, regional and national developers are building an unprecedented amount of speculative bulk warehouse space, according to Phil Charmoli of Grubb & Ellis|Commercial Kentucky.

There are a number of speculative bulk warehouse buildings under construction in the Louisville area. In Bullitt County, Pattillo Properties is building a 412,000-square-foot building and Catellus Development Corp. is developing a 384,000-square-foot project. In the South submarket, ProLogis Trust is building a 350,000-square-foot development and Airspace I has a 285,000-square-foot project underway.

In Riverport, Keystone Property Trust is constructing a 450,000-square-foot development, and First Industrial is underway with 221,000 square feet. In the East submarket, Boland Development has 122,000 square feet under construction, and Dixie Warehouse is developing a 140,000-square-foot building. "With this much bulk space coming available in the market within a short time period, demand must pick up to satisfy the developers or there will be higher vacancy rates and a downward pressure on rents," says Charmoli.

The majority of industrial development is taking place in Bullitt County, just south of Louisville, and Riverport, a west/southwest submarket, because land availability elsewhere is scarce. In addition, these areas have good access to interstates, UPS and the airport. The UPS hub is a driving force in Louisville.

Catellus Development Corp. and Keystone Property Trust are two of the newest developers to enter the Louisville market. Bulk distribution and e-commerce companies are tenants these and other developers are trying to attract.

Several major leases have been closed recently. In Riverport, Global Sports leased 300,000 square feet in the Genicom Building, and Genpak, LLC signed a 150,000-square-foot lease in the Verst Building on Global Drive. In College Industrial Park, General Electric signed a lease for 168,000 square feet and Accu-tec, Inc. leased 127,000 square feet. PPG, Inc. recently leased 110,000 square feet in Southpark Business Center.

Rental rates in the Louisville area range from $3.10 to $3.70 per square foot, triple net. Vacancy rates are at 15.5 percent overall and 10.6 percent for Class A only.

Areas to keep an eye on include Bullitt County, 8 miles south of the Louisville International Airport and the Riverport and Commerce Crossings submarkets, notes Charmoli. These areas contain available ground, new development and good access to the interstate system.

The industrial market has experienced record absorption over the past several years. Year-to-date third quarter 2000 absorption was approximately 2 million square feet, substantially above the 1.2 million square feet figures for the end of the third quarter last year.


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