The industrial sector continued to power through at full throttle, with e-commerce activity and fulfillment and logistics centers fueling most of the new supply being brought to market. According to CommercialEdge data, nearly 700 million square feet of industrial space was under construction at the end of June on a national level, representing 4 percent of the total stock.
Construction activity was concentrated in Sun Belt metros thanks to favorable market conditions and demographic trends, with Dallas-Fort Worth, Phoenix and the Inland Empire leading the way in this aspect. Port markets and Midwestern logistic hubs also performed well; Indianapolis, for example, has one of the largest pipelines in the nation by square footage and the second largest by percentage of existing stock, the latest CommercialEdge industrial report shows.
Using CommercialEdge data, we identified the top five markets for industrial development in the nation while looking at their active pipelines. These markets encompassed 196 million square feet of industrial space under construction as of June, representing 28.0 percent of the country’s total stock.
| Rank | Market | SF Under Construction | Percent of Stock |
| 1 | Dallas | 60,659,670 | 7.22% |
| 2 | Phoenix | 44,440,543 | 15.50% |
| 3 | Inland Empire | 37,363,267 | 6.23% |
| 4 | Chicago | 26,851,838 | 2.72% |
| 5 | Indianapolis | 26,635,817 | 8.38% |
1. Dallas-Fort Worth
The Dallas-Fort Worth metro ranked first in terms of industrial development nationwide, with 60.7 million square feet underway as of June, accounting for 7.2 percent of total stock. A combination of factors such as the state’s business-friendly environment, high inbound migration, as well as corporate relocations contributed to the area’s transformation into a sought-after destination for industrial investment. Nearly 14.9 million square feet were delivered in the metro year-to-date in June, encompassing almost as much as the second and third most active markets combined.
Having become one largest points of distribution in the U.S., Dallas-Fort Worth is home to a wide array of third-party logistics companies. One of them is DHL Supply Chain, which is currently working on Elizabeth Creek Gateway-Building C in Justin, Texas, the largest project underway in the area. Construction of the 1.5 million-square-foot development kicked off this spring, while completion is slated for the first quarter of 2023.
2. Phoenix
The Phoenix industrial market is experiencing an overflow development fueled by demand coming from tenants fleeing the supply-strained and expensive Southern California. The under-construction pipeline included 44.4 million square feet of industrial space as of June, representing a staggering 15.5 percent of inventory. Deliveries in the first half of 2022 amounted to some 7.9 million square feet.
The largest industrial project underway in the metro consists of the first phase of Taiwan Semiconductor Manufacturing Co.’s 3.8 million-square-foot plant, rising 25 miles north of Phoenix. The $12 billion project represents the largest foreign investment in the state’s history and is expected to be completed in early 2024.
3. Inland Empire
Southern California is the most in-demand industrial region in the nation, and the Inland Empire is the main beneficiary. Some 34.5 million square feet of industrial space was under construction in the metro as of June, accounting for 6.2 percent of total stock. With the lowest vacancy rate in the country—a minuscule 0.6 percent—and the highest rent growth, developers continue to be bullish on the area.
Although a little over 7.4 million square feet of space came online in the metro between January and June 2022, development may be tempered in coming years due to recent moratoriums on new industrial development. The largest project underway in the Inland Empire was Prologis’ Merrill Commerce Center, a mega-warehouse rising at 8900 Merrill Ave. in Ontario, Calif. Upon completion, scheduled for the end of 2022, the 4 million-square-foot build-to-suit development will house Amazon’s largest industrial facility in the country.
4. Chicago
The nation’s largest industrial market had 26.9 million square feet of industrial space underway in June, or 2.7 percent of total stock. Additionally, roughly 7.5 million square feet of industrial space was completed in the metro in the first half of 2022. With below-average rental rates ($5.38 per square foot) and vacancy (4.9 percent), the distribution hub has remained a hotspot for new industrial development, including the first multi-story warehouse project to be built in the Midwest.
Notable industrial developments in Chicago include the 897,000-square-foot build-to-suit facility for Central Steel and Wire, at Gateway 57 Business Park in University Park, Ill. Developed by a joint venture between Venture One Real Estate and CRG, the Class A building is scheduled for completion in early 2023 and is part of a 355-acre master-planned development located south of downtown Chicago.
5. Indianapolis
Thanks to its central positioning and ready access to national and international markets, Indianapolis has been solidifying its position as a major hub for U.S. logistics. The Midwestern market—home to the second-largest FedEx hub in the world—had 26.6 million square feet of industrial projects under construction in June, or 8.4 percent of the metro’s stock. Industrial deliveries in the first half of the year equated to 7.9 million square feet.
Walmart is currently working on the largest development in the metro, a next-generation fulfillment center dubbed as Walmart Distribution Center. The 2.2 million-square-foot project will span 152 acres at 5300 W. County Road 500 N. in McCordsville, Ind. The retail giant broke ground on the $600 million property in 2020, while delivery is scheduled for this fall.
