Interstate Frontage and the Industrial Buildout
Industrial at the Scott County interchanges is the tightest product in the region, and the frontage is gone before the rent.
The industrial market at the Scott County interchanges has run out of frontage faster than it has run out of rent. A logistics user who needs 60,000 square feet near I 75 will find the frontage before the building, and the building before the price. The constraint is the land, not the demand.
We underwrite industrial to the frontage, the loading, and the clear height, because those are the three a logistics user will not trade. The rent follows the three, and the cap rate follows the credit. A building with the right three and the wrong credit is a building the buyer will regret.
The buildout is the opportunity and the risk. The interchange economy will keep absorbing space, but the utility and the road capacity are racing to keep up, and a site bought before the utility is confirmed is a site that may not deliver on the schedule the pro forma assumed.
An investment priced to the pro forma rather than the rent roll will sit, and then sell below the number it rejected.
Student housing underwrites to the admission numbers, not the rent roll, and the admission numbers move slowly then quickly.