With Toledo’s location near the Michigan state line, multiple interstates and port access to the Great Lakes, it’s no wonder that industrial fundamentals have remained steady or that notable tenants like Libbey, First Solar and Home Depot have flooded the area.
Toledo’s economy has traditionally been centered around manufacturing, though, specifically bolstered by auto parts suppliers and assemblers and glass manufacturers. General Motors has the largest transmission manufacturing plant in North America here and has invested more than $650 million to prepare the facility for a new product line, showing its continued commitment to manufacture in Toledo.
Since 2010, more than 7 million square feet of industrial space has been absorbed in Toledo. While this is significantly less than numbers seen in nearby Cleveland or Detroit, this is above average by the metro’s standards. When compared to other Ohio metros of similar size, Toledo is a close second to Dayton in terms of the highest net absorption over the past 12 months.
The majority of inventory in Toledo consists of logistics and specialized industrial facilities that are more than 20 years old. New supply is historically modest here, mostly consisting of properties less than 100,000 square feet. This cycle had a banner year in 2015, thanks to the delivery of the 1.6-million-square-foot Home Depot Fulfillment Center. And the largest project since then is close to completion in Findlay: Campbell’s Soup is close to completing their third facility in northwest Ohio, just south of Toledo. The 740,000-square-foot distribution center demonstrates the potential that Toledo has.
Modest supply and steady demand have led to a continuous compression of vacancies since 2012, which has promoted strong rent growth as a result. Cumulative rent gains this cycle have exceeded 20 percent, but despite this growth, industrial space in Toledo still rents for about the half the national average.
Sales volume in Toledo has been strong over the course of this cycle, reaching a cyclical high in 2015, when turnover exceeded $140 million largely due to the acquisition of the Home Depot Fulfillment Center. The majority of trades here involve 1- and 2-Star properties that are less than 50,000 square feet with private, out-of-state investors as buyers. Though volume has not returned to the peak reached in 2015, average pricing per square foot continues to increase, and sales stay within the historical expectations for the metro.