Blue Sky Works - Market Analysis Final Report (8.11.25)

Market Analysis for the Blue Sky Small Area Plan

Prepared for: Lexington-Fayette Urban County Government Division of Planning

August 11, 2025

Table of Contents Executive Summary .............................................................................................................................................ii Introduction....................................................................................................................................................... 1 I. Economic Profile ............................................................................................................................................. 2 Geographical Overview .............................................................................................................................................2 Regional Economy .....................................................................................................................................................2 Labor Force Participation and Unemployment .....................................................................................................4 Blue Sky Study Area Employment .........................................................................................................................6 Employment Projections.......................................................................................................................................7 Workforce .................................................................................................................................................................8 II. Real Estate Conditions & Industrial Clusters...................................................................................................11 Regional Context .....................................................................................................................................................11 Blue Sky Study Area Conditions...............................................................................................................................13 Industrial Space .......................................................................................................................................................17 Industrial Property in Blue Sky Study Area .........................................................................................................17 Flex Space ................................................................................................................................................................18 Office and Commercial Support Characteristics .....................................................................................................18 Blue Sky Industrial Clusters .....................................................................................................................................20 Construction and Contracting Cluster.................................................................................................................20 Automotive Industry Cluster ...............................................................................................................................21 Manufacturing and Industrial Services ...............................................................................................................21 Other Services .....................................................................................................................................................22 III. Competitive Framework ...............................................................................................................................23 Competitive Subareas .............................................................................................................................................23 Coldstream Research Campus ............................................................................................................................23 Legacy Business Park...........................................................................................................................................24 Blue Grass Business Park ....................................................................................................................................24 Leestown, Venture & West Hampton Industrial Parks .......................................................................................24 Georgetown (Scott County) ................................................................................................................................25 Berea Industrial Park (Madison County) .............................................................................................................25 IV. Blue Sky Industrial Demand..........................................................................................................................26 VIII. Recommendations .....................................................................................................................................27 Development Potential ...........................................................................................................................................27 Property Improvement and Modernization .......................................................................................................27 Adaptive Reuse and Redevelopment Potential ..................................................................................................27 New Development and Expansion Opportunities...............................................................................................27 Appendix Tables

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Executive Summary This report analyzes local real estate trends and market conditions to be used as a foundation for a small area plan for the Blue Sky Study Area (Study Area), located within the city’s growth areas as part of the adopted 2024 Urban Growth Master Plan (UGMP). The analysis focuses on the Study Area and Lexington-Fayette Urban County in comparison with the Lexington-Fayette Metropolitan Statistical Area (MSA)1, referred to as Metro Area.

To understand the market context within the Study Area, more specifically the potential for redevelopment within the Study Area and newly zoned industrial parcels, Lexington-Fayette Urban County Government (LFUCG) hired Partners for Economic Solutions as part of a multi-disciplinary team to prepare an overview of market conditions.

As the economy in the Lexington-Fayette Metro Area steadily expands, Lexington is positioned as the key economic engine within Central Kentucky. It has important strengths in the economic sectors most relevant to demand for industrial land and facilities: manufacturing; transportation and warehousing; wholesale trade; utilities; and construction.

The market exhibits considerable diversity across property types, with industrial and flex facilities forming the largest segment with nearly 65 percent of all existing space. Supporting commercial infrastructure includes 10 percent in retail and supportive office space. The Study Area offers specialty facilities such as auto salvage and auction operations, which occupy two properties totaling 36,800 square feet. Finally, hospitality facilities provide 370 rooms in 278,900 square feet in the Study Area.

The Study Area—shaped by its industrial and commercial character—supports a relatively high share of mid- and higher-wage positions. Over 61 percent of workers earn more than $3,333 per month, while another 28 percent earn between $1,251 and $3,333 monthly with a minority of 11 percent earning less than $1,250. In contrast, the broader Metro Area shows a more diverse income distribution: 54 percent 1 The Lexington-Fayette Metro Area includes Bourbon, Clark, Fayette, Jessamine, Scott and

Woodford counties.

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of workers earn more than $3,333 per month, 27 percent earn between $1,251 and $3,333 monthly, and 19 earn less than $1,250. This comparison underscores the Study Area’s stronger concentration of higher-wage employment opportunities.

Development opportunities in the Study Area are constrained. The area is largely built out, offering limited potential for greenfield or specific infill projects.Established land-intensive operations such as auto auctions, which require extensive surface parking and generate strong returns, create practical near-term obstacles to redevelopment.

Regional employment projections for industries dependent on industrial and flex space, combined with historical development patterns, indicate the Metro Area will require an average of 200,000 to 275,000 square feet of new space annually through 2045, totaling 4.2 to 5.8 million square feet. This projection mirrors the previous decade’s positive net absorption of 230,000 square feet annually and excludes attraction of a potential major user such as Toyota.

Lexington is positioned to capture 35 to 40 percent of the Metro Area's future industrial and flex space development, representing 1.5 to 2.3 million square feet of new construction. New industrial and flex space development in the Study Area could reach 200,000 to 400,000 square feet by 2045 with redevelopment of the UPS facility and other underutilized sites. In comparison, the UGMP demand projected 55 to 60 acres of new industrial / flex development, leaving an estimated 200,000 to 350,000 square feet for other UGMP sites.

The existing Study Area will be most competitive for price-conscious industrial users and expansion of existing users. The Study Area’s industrial developments would likely be less attractive to technology uses, such as biotechnology and pharmaceutical companies. Such firms depend on recruiting a highly skilled technical workforce that has tended to prefer more urban mixed-use locations where they can access restaurants, retail and multi-family housing, ideally proximate to downtown Lexington and the University of Kentucky.

Those companies desiring modern new facilities with interstate visibility may find the costs of greenfield development to be too high. Most regional prospects are seeking existing facilities or shovel-ready sites that can be under development in less than six months. Attracting these users will require a developer to pursue development approvals and make infrastructure improvements in advance of a potential buyer/user. Available greenfield land in the Study Area is constrained by the infrastructure investment necessary to address topologic and soil constraints. A public-private partnership or public incentives may be necessary to encourage such investment.

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Introduction The Lexington-Fayette Urban County Government has initiated the Blue Sky Small Area Plan as part of a strategic approach to guide future industrial development within this designated area. Building on the foundation of Imagine Lexington 2045 and the UGMP, this planning effort focuses on establishing development principles that emphasize industrial growth, employment centers, redevelopment opportunities, and supportive infrastructure to accommodate the area's evolving economic needs.

This comprehensive market analysis includes: • economic and market analysis; • assessment of current land uses, current tenancy and site suitability to meet development needs; • trends in industrial and flex development; and • identification of land within the 301-acre area with the highest potential for future industrial or mixed-use development.

The market findings presented in this analysis will provide a foundation for a Small Area Plan that supports the Study Area’s role in Lexington's broader economic development strategy.

Map 1. Blue Sky Study Area

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I. Economic Profile The Blue Sky Study Area represents a vital component of the City of Lexington, which itself anchors the broader Lexington-Fayette Metropolitan Statistical Area (MSA)2. This evaluation of the Study Area’s economic and development potential begins with an analysis of the economic conditions and trends within Lexington, focusing on the sectors with greatest relevance to the industrial district.

Geographical Overview The Study Area functions as an integral component of Lexington's broader economic ecosystem, positioned strategically in the southeastern portion of the metropolitan area within the 40509 ZIP code designation. The Study Area developed as a Rural Activity Center before being included in the Urban Services Area under the 2024 Lexington UGMP. The Study Area encompasses several interconnected corridors that collectively form a comprehensive industrial district. Athens Boonesboro Road forms the industrial district’s southern boundary and serves as a critical connector, linking the Study Area to regional highways and the I-75 interchange. Blue Sky Parkway serves as the primary local industrial collector route providing access to the area's industrial facilities while connecting to broader regional transportation networks and providing direct access to the majority of manufacturing and warehouse facilities.

United Court, Cutters Hill Court, Kingpost Court, and Jo Mars Street function as secondary industrial corridors that extend the Study Area’s capacity and provides specialized areas for different types of industrial operations. These courts and side streets create depth within the industrial district, offering a range of facility types and sizes to meet diverse business requirements. The area surrounding Athens Boonesboro Road features a mix of commercial uses—including hotels, retail stores, and convenience outlets—that provide essential services and products for industrial businesses, employees, and regional travelers.

Regional Economy The analysis of the region’s economic environment begins by analyzing employment patterns, unemployment levels, job categories, and wage trends. Over the past five decades, the LexingtonFayette Metro Area has experienced steady and significant job growth, adding approximately 170,000 jobs from 1970 to 2020. Total Lexington employment expanded from 99,900 jobs in 1970 to 241,900 by 2020, more than doubling the size of the employment base. Both Lexington and the Metro Area increased their job count by roughly 16 percent from 2000 to 2020. (Refer to Appendix Table A-1.)

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The Lexington-Fayette Metro Area includes Bourbon, Clark, Fayette, Jessamine, Scott and Woodford counties.

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Over the 2013-2022 decade, the region added 25,395 jobs. (Refer to Appendix Table A-2.)

Lexington alone represented 72 percent of Metro Area jobs with a total of 200,724 jobs in 2022. The city added 16,478 net new jobs between 2013 and 2022 – accounting for 65 percent of regional job growth.

This represented an 8.9-percent increase. (See Appendix Table A-3.)

Lexington’s employment performance has consistently outpaced Kentucky’s overall growth. Longitudinal Employer-Household Dynamics (LEHD) data from 2002 to 2022 (the latest available) show that Lexington

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experienced a 22.2-percent increase in jobs, compared to 14.3 percent statewide. (See Appendix Tables A-3 and A-4.)

Labor Force Participation and Unemployment Labor force participation provides an additional measure of economic vitality. This metric encompasses both employed individuals and those actively seeking employment. Lexington's labor force participation rate of 67.9 percent in 2022 exceeded both the Metro Area rate of 66.4 percent and the Kentucky rate of 59.5 percent. Unemployment rates stood at 4.1 percent for Lexington and 4.2 percent for the Metro Area as of 2024.

Table 2 summarizes the 2022 LEHD data broken down by industry sector with a focus on the types of jobs typically accommodated in industrial districts – manufacturing, wholesale trade, transportation and warehousing, utilities, and construction jobs. In Lexington, one in five jobs (18.8 percent) fall into these industrial sectors, as compared to one in four jobs (23.6 percent) in the Metro Area. Lexington has 57.5 percent of the metro area’s industrial-type jobs.

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Table 2. Lexington, and Lexington-Fayette Metro Area Employment by Sector, 2022 Lexington Percent of Total

Lexington's Lexington-Fayette Metro 1 Share of Area Metro Area Percent of Employment Jobs Total

Industry Sector

Jobs

Industry Employment Manufacturing

10,957

5.5%

38.1%

28,769

10.4%

Mining, Quarrying, and Oil and Gas Extraction Wholesale Trade

142 7,045

0.1% 3.5%

64.0% 63.1%

222 11,167

0.1% 4.0%

Transportation and Warehousing

9,263

4.6%

80.0%

11,573

4.2%

Utilities Construction

350 9,984

0.2% 5.0%

57.7% 75.0%

607 13,309

0.2% 4.8%

37,741

18.8%

57.5%

65,647

23.6%

Agriculture, Forestry, Fishing and Hunting

1,595

0.8%

38.7%

4,122

1.5%

Retail Trade Information

21,137 2,756

10.5% 1.4%

69.8% 82.3%

30,264 3,349

10.9% 1.2%

Financial Activities Professional and Business Services

9,484 15,780

4.7% 7.9%

84.3% 79.0%

11,254 19,970

4.1% 7.2%

Educational, Health and Social Services Leisure and Hospitality

62,211 23,106

31.0% 11.5%

81.6% 75.4%

76,238 30,649

27.4% 11.0%

Industrial Subtotal Non-Industrial Employment

Other Services

20,804

10.4%

76.6%

27,149

9.8%

Public Administration Non-Industrial Subtotal

6,110 162,983

3.0% 81.2%

66.2% 76.8%

9,228 212,223

3.3% 76.4%

Total Employment

200,724

100.0%

72.2%

277,870

100.0%

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Note: Lexington-Fayette Metro Area includes Bourbon, Clark, Fayette, Jessamine, Scott and Woodford counties.

Source: Longitudinal Employer-Household Dynamics, Census Bureau, 2025; Partners for Economic Solutions, 2025.

As shown in Appendix Tables A-3 and A-2, the City and Metro Area saw significant job gains in the health care, education, and professional and business services industries from 2017 to 2022. At the same time, jobs declined in manufacturing; retail; and leisure and hospitality. The decline in leisure and hospitality employment correlates directly with the impacts of the COVID-19 pandemic. While this sector continues its recovery trajectory, employment levels surpassed pre-pandemic benchmarks based on JobsEQ, 2024.

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The city’s share of the Metro Area’s industrial-type3 employment increased from 55.7 percent in 2002 to 57.5 percent in 2022. This growth is primarily attributed to gains in transportation and warehousing employment, with the large influx of jobs associated with Amazon’s local expansion. Lexington’s share of manufacturing jobs has declined significantly – from n 41.5 percent in 2002 to 39.5 percent in 2017 and 38.1 percent in 2022. This shift reflects the continued concentration of manufacturing activity in Scott County’s Georgetown area and the competitive industrial development advantage offered by lower land costs in the Metro Area’s more rural counties.

Blue Sky Study Area Employment The Study Area houses roughly 140 companies with a 2022 total of 921 jobs as revealed by LEHD data (Table 3). The study area experienced a 42-percent job loss from 2002 to 2013, losing 499 jobs, primarily in transportation, wholesale trade, and manufacturing. Since 2013, the Study Area has added 220 jobs.

In terms of industry-specific trends, the Study Area greatly expanded its base of manufacturing and construction jobs while losing transportation and warehousing jobs during the 2013–2022 period, including the loss of jobs with the UPS terminal closure. After the UPS terminal outbuilding fire in 2018 and the purchase of all UPS Freight operations in 2021 by TFI International (Canadian-based logistics firm), the former UPS truck terminal was listed for-sale. Appendix Table A-5 provides data for additional years.

The Study Area houses a distinct set of employers focused on manufacturing, auto auctions, construction, logistics, and specialized repair and other industrial services. These employers play an important role in supporting the region's economic base. Guided on indicative parameters such as workforce size, revenue generation, and overall economic contribution, the following five businesses have been identified as key drivers of employment and industrial activity in the area.

3 Based on Longitudinal Employer-Household Dynamics, North American Industrial Classification System two-digit

codes: 21- Mining, Quarrying, and Oil and Gas Extraction; 22- Utilities; 23- Construction; 31-33 Manufacturing; 42Wholesale Trade; and 48-49 Transportation and Warehousing.

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The Study Area’s largest companies include: 1. Elliot Services- Electrical Contractors – 275 +/- employees 2. ADESA- Automobile Auction (Wholesale /Auto Sales) – 140 employees 3. Copart Salvage Auto Auctions- Automobile Auction (Wholesale/ Auto Sales) – 25 employees 4. Blevins -Mobile Home Equipment & Parks – 25 employees 5. ISG-Sign Manufacturers – 34 employees

Employment Projections Employment projections provide a critical foundation for analyzing development potential. Woods & Poole Economics projections (detailed in Appendix Table A-5) anticipate an 18.5-percent increase in total Metro Area employment from 2025 to 2045, adding 70,648 new positions. The projections indicate that Lexington will experience slightly more rapid growth at 18.8 percent, resulting in 50,893 additional jobs. These baseline projections extrapolate recent trends across national, regional, and local economic indicators.

Focusing on the economic sectors most relevant to demand for industrial land and facilities, Woods & Poole projects to 2045: • • • • •

a 2.7-percent job gain in construction; an 8.8-percent job loss in manufacturing*; a 13.5-percent job gain in transportation and warehousing; a 1.2-percent job loss in wholesale trade*; and a 12.5-percent job loss in utilities*.

*Some of the job losses relate to improved efficiency through automation and other investments rather than a reduction in economic activity and industrial space demand.

The Study Area’s share of these future jobs will depend on the availability of facilities and land as well as strategies to improve the area’s functionality and ability to compete. Employment growth in a region is often tied to the capacity for physical expansion – either through greenfield expansion or intensified use of existing land via infill development or the strategic replacement of lower-employment land uses with more intensive uses. For example, converting warehouse to a manufacturing facility.

Development opportunities in the Study Area are increasingly constrained. The area is largely built out, offering limited potential for infill projects that preserve the corridor’s core industrial and commercial identity. While isolated vacant parcels remain – such as the former UPS facility – these are exceptions rather than the rule. Major new development is hampered by tight land availability. Moreover, certain land-intensive uses such as auto auctions, which occupy expansive surface parking areas, are profitable and difficult to relocate. Outward expansion beyond the Study Area limits is also highly restricted by Lexington’s newly adopted Urban Growth Master Plan.

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As a result, the Study Area, under current regulations, is not positioned for significant employment expansion. It is expected to maintain a relatively stable employment base, supported by its entrenched industrial and auction-related business functions, infrastructure, and high occupancy rates with selected infill on available sites. The area’s economic trajectory reflects a mature market with limited developmental inertia, suggesting incremental change rather than dynamic expansion.

Workforce The spatial distribution of Lexington's workforce has shifted measurably over the past decade. In 2022, 46.5 percent of Lexington's workforce resided within the City boundaries, declining from 50.2 percent in 2012. Approximately 21 percent resided in adjacent Kentucky counties—Madison, Jessamine, Scott, Clark, Woodford, and Bourbon—according to LEHD data. An additional 30 percent commuted from more distant counties, including Franklin and Jefferson.

Roughly 30 percent of Study Area employees lived in Lexington-Fayette County in 2022. Its industrial and commercial character generated inbound commuting with 24.7 percent coming from Jessamine, Madison, Clark and Bourbon counties and another 8.0 percent coming from Montgomery and Scott counties. Fully 41.2 percent of Study Area employees commuted from beyond the Metro Area (See Map 2). About one-third of workers traveled less than 10 miles to work, while another third commuted between 10 and 24 miles.

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Map 2. Home Locations of Workers Employed in Blue Sky Study Area, 2022

In 2022, LEHD data showed 947 workers employed in the Study Area businesses and organizations. As is typical in many working-class environments, the 30 to 54 age group constituted the largest segment of the workforce, accounting for 550 out of 947 workers (58 percent) employed in the Study Area. This was followed by 212 workers aged 55 and older (22 percent), while the remaining 185 workers (20 percent) were under the age of 30. The age distribution and aging patterns in the Study Area closely mirrored that of the broader Lexington area, reflecting a similar demographic shift: a modest decline in the proportion of workers aged 30 to 54, accompanied by a gradual increase in the share of older workers aged 55 and above with the aging of the “Baby Boom” generation. Throughout the nation the shortage of skilled workers available for these opportunities will exacerbate hiring challenges in the near-term future.

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In 2022, more than half of all jobs in Lexington paid over $3,333 per month (equivalent to $40,000 annually), while 18 percent of jobs paid $1,250 per month ($15,000 annually) or less. Reflecting its jobintensive, industrial-commercial nature, the Study Area has a higher share of mid- and higher-wage positions. More than 61 percent of workers in the area earned over $3,333 per month, with an additional 28 percent falling within the $1,251 to $3,333 monthly income bracket. As a result, the proportion of jobs paying less than $1,250 per month in this area is only 11 percent.

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II. Real Estate Conditions & Industrial Clusters Industrial space tends to fall into two distinct categories: industrial (predominantly warehouse/distribution) and flex space. Warehouse/distribution facilities have changed significantly with adoption of new stacking and retrieval technologies. High ceiling clearances of 40 feet or more allow greater cubic feet for rack stacking. Modern industrial buildings designed for manufacturers and assembly operations often vary with the specific industry, but speculative buildings are typically designed with 18- to 25-foot ceilings, truck docks, and open space that can be subdivided and customized for multiple tenants.

Flex space provides a more adaptable type of built industrial product. Flex space is typically single-story space with a portion finished as office space and a portion retained as space for warehousing, repair and/or production. Typically, it is developed as a long linear building with separate bays (with separate entrances) that can be combined to provide a range of space sizes from 1,000 to more than 20,000 square feet. Office space is developed in the front with truck docks or roll-up doors provided in the back of the building to facilitate movement of goods. The interior space can be customized to the specific tenant’s needs to include more or less office space. For many cost-sensitive tenants, flex space provides lower-cost office space than is available in multi-story office buildings. Parking is typically provided in a surface lot, often at the front door.

Regional Context Industrial activity in the Lexington-Fayette Metro Area is largely concentrated along well-connected corridors that offer direct access to major highways, rail lines, and freight infrastructure.

As of end of the first quarter of 2025, the Metro Area contains approximately 62.9 million square feet of industrial and flex space, with Lexington accounting for over half (53 percent) of the total supply. From 2015 through 2024, the region added 2.6 million square feet of new space, with roughly 43 percent of that growth occurring within Lexington itself (Appendix Table A-6). The regional vacancy rate stood at just 3.2 percent in the first quarter of 2025, somewhat below the optimal rate of 4.0 to 5.0 percent for a healthy market balance between supply and demand. During this period, industrial asking rents rose from $4.85 per square foot (net of expenses) in 2015 to $7.53 per square foot in the first quarter of 2025.

Despite Lexington housing the majority of the region’s industrial/flex supply, it accounted for just 23 percent of net absorption (i.e., the increase in the amount of occupied space) between 2020 and 2024.

At the same time, more than three-quarters of the metro area's vacant inventory is located in Lexington, underscoring the concentration of availability. Currently, only 53,800 square feet of new space is under construction in the city (30 percent of Metro Area total as of the end of second quarter 2025), reflecting a conservative development pace amid rising costs of land and construction.

Research and development space remains a limited segment of the market, with only four buildings designated for such use – totaling approximately 162,000 square feet in Lexington. These facilities are 11

home to a mix of professional, technical, and manufacturing tenants. Notably, the University of Kentucky's veterinary lab is the only full-building lab tenant; the remaining structures serve multiple occupants.

Lexington Industrial & Flex Conditions, 2014-2024 99%

1,200

800

98%

600 400

97%

200 0 96%

-200

Occupancy Rate

Thousands of Square Feet

1,000

-400 95%

-600 -800

94%

-1,000 2014

2016 New Deliveries

2018

2020 Net Absorption

2022

2024

Occupancy Rate

Between 2015 and 2024, Lexington’s industrial/flex inventory expanded modestly from 32.3 million to 33.5 million square feet (Appendix Table A-7). During the pandemic, development activity slowed dramatically, with occupancy reaching a high of 98.1 percent in 2021 due to minimal new supply in 2020. In contrast, the six years leading up to the pandemic (2014–2019) saw an average of 191,300 square feet of industrial/flex space delivered annually – highlighting the disruption caused by COVID-19 and the shifting priorities of industrial users.

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Table 5. Lexington and Lexington-Fayette Metro Area Industrial & Flex Market Conditions, Q1 2025 Lexington-Fayette Lexington Industrial & Flex Inventory Occupied Square Feet Occupancy Rate Vacant Space, Direct Vacant Sublease Space Total Vacant Space Vacancy Rate Space Under Construction Average Annual Absorption, 2020-2024 Change in Reported Rents, 2020-2025

33,524,800 31,941,900 95.3% 1,530,524 52,376 1,582,900 4.7% 53,800 66,900 24.7%

Metro Area

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62,928,771 60,929,252 96.8% 1,947,143 52,376 1,999,519 3.2% 53,800 286,123 38.9%

Lexington Share of Region 53.3% 52.4% NA 78.6% 100.0% 79.2% NA 100.0% 23.4% NA

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Note: Lexington-Fayette Metro Area definition includes the following counties: Bourbon; Clark; Fayette; Jessamine; Scott and Woodford.

Source: CoStar, 2025; Partners for Economic Solutions, 2025.

Blue Sky Study Area Conditions Within this broader context, the Study Area has remained relatively stable, with small-scale additions and subtractions effectively balancing each other out, resulting in a limited net contribution to overall inventory since 2007. Industrial/commercial real estate within the Study Area encompasses approximately 1.3 million square feet distributed across multiple property types; roughly two-thirds of the space is industrial/flex space.

The market composition demonstrates remarkable diversity across property classifications, with industrial facilities representing the dominant component at 763,655 square feet across 68 buildings, supplemented by significant flex space inventory of 88,947 square feet in eight buildings. Focused around the I-75 interchange, commercial space includes retail facilities totaling 56,502 square feet in 13

nine buildings, 79,351 square feet of office space across 11 buildings, and hospitality facilities constitute 278,938 square feet in five properties with a total of 370 rooms.

The earliest phase of development began in the mid-1970s, laying the groundwork for industrial activity during a period of notable economic expansion in Lexington’s manufacturing and industrial sector, which experienced nearly 10 percent growth within five years. Properties constructed between 1976 and 1980 marked the initial wave that validated the area’s viability for industrial use and established essential infrastructure that remains in use today. The primary development boom followed in the 1980s, with a median building age of 38 years, corresponding to a peak construction period around 1986-1987. Since then, new development has slowed significantly, with fewer than 10 percent of properties built after 2000 and only a limited number undergoing substantial renovations.

Map 3. Blue Sky Study Area Development Patterns

The Blue Sky Study Area incorporates a few opportunity sites representing both greenfield properties available as a result of the adopted Urban Growth Area, as shown on Map 4. These properties represent viable industrial and flex development sites identified by reviewing public land record information from the Property Valuation Administrator and third-party data provider CoStar, Inc. In some instances, the value of the existing structure and underutilized land may present an opportunity for intensification of sites (for example, the currently vacant former UPS truck terminal).

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Map 4. Blue Sky Study Area Land

Classing of industrial/commercial space helps in evaluating supply by differentiating buildings based on physical condition and general operating performance. Class A space consists of investment-grade properties that command the highest rents and / or sale prices due to ceiling heights, exemplary location, tenant layout, floor plans and modern mechanical systems. Class B space includes more generic and often older properties that command less rent per square foot and do not offer the same features or amenities as Class A space. Class C space consists of older building stock that is approaching obsolescence and gets the lowest rents and / or sale prices compared to other commercial classes. Class C properties may lend themselves to renovation and upgrading.

The area is predominantly composed of Class C properties, which account for 81 percent of the 85 classified facilities. These facilities encompass approximately 618,000 square feet, or 68 percent of the total space. These facilities typically consist of basic industrial construction with standard utility infrastructure, functional truck access, and minimal premium features. While they may lack modern systems or amenities, Class C buildings provide cost-effective space for businesses with straightforward operational needs.

Class B properties represent the remaining 19 percent of properties, totaling about 290,000 square feet or 32 percent of the total area. These buildings tend to offer improved systems, better energy 15

performance, and upgraded interior configurations that appeal to higher-value industrial users seeking more functional efficiency.

Additionally, a portion of the inventory (approximately 18 properties) remains unclassified.

As of June 2025, CoStar reported that the properties in the Blue Sky industrial submarket for which data exists experienced a positive net absorption of 5,900 square feet over the past 12 months, reversing the prior period’s negative trend of 20,300 square feet. Vacancy has tightened to 2.5 percent, down from 3.4 percent, reflecting improving occupancy conditions. Market asking rents have increased from $9.07 to $10.81 per square foot, indicating rising demand but competitive rates are still below the national average of $12.15 per square foot. The West Lexington submarket asking rents reached $9.66 per square foot as of the second quarter of 2025; in contrast, East Lexington submarket asking rents climbed to $10.14 per square foot on average. In comparison, Clarke, Jessamine and Scott counties offer comparable industrial / flex space for lower rents per square foot ranging from $6.92 to $8.87, respectively. Sale prices have also appreciated, reaching $114 per square foot compared to $108 per square foot in the previous period. The market capitalization rate remains stable at 9.1 percent, signaling steady investor expectations and a favorable investment environment for income-producing assets. It is important to note that these metrics are based on the CoStar subset of 81 properties classified as industrial.

The substantial industrial footprint reflects the Study Area's manufacturing and distribution heritage, while the flex space component addresses modern business requirements for adaptable facilities that can accommodate evolving operational needs. The commercial and hospitality sectors are primarily focused on interstate travelers.

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Industrial Space The following Blue Sky Area industrial market trend information is based on data from CoStar, a national data provider, and information provided from direct interviews with area brokers, property owners and developers. Additionally, this analysis incorporates field reconnaissance and on-the-ground surveys, direct outreach to local industrial tenants and operators, satellite mapping data, and physical site inspections to validate market conditions and building characteristics observed in the database information.

This approach provides a more comprehensive foundation by combining quantitative data sources with qualitative field research and visual verification methods.

Industrial Property in Blue Sky Study Area The industrial sector within the Study Area encompasses 763,655 square feet of space across 68 buildings, creating an average facility size of 11,230 square feet that accommodates diverse operational requirements ranging from specialized manufacturing to comprehensive distribution and warehouse operations. The size distribution spans from compact 1,092 square-foot facilities suitable for specialized service operations to the substantial 95,744 square-foot former UPS facility (previously operated by TForce Freight) that serves regional logistics requirements on a 36.77-acre site.

Most industrial buildings within the region fall within the 5,000 to 15,000 square foot range, indicating market specialization in accommodating small to medium-scale industrial operations that benefit from the region's transportation access and infrastructure capabilities while maintaining relatively low occupancy costs.

Lot sizes for industrial properties typically range between one-half and three acres, providing adequate space for truck maneuvering, employee parking, outdoor storage, and potential facility expansion while maintaining efficient land utilization. Several properties feature larger land parcels, including the former UPS facility's 36.77 acres, the concrete manufacturing facility at Jo Mars Street encompassing 12.9 acres, and the nine-acre screen printing and contract embroidery manufacturing and production facility on United Court.

Industrial properties within the Study Area demonstrate remarkable flexibility in actual usage patterns that often exceed their primary facility designations, accommodating diverse business requirements.

The Study Area's industrial properties primarily serve dual secondary utilization functions encompassing both warehouse and manufacturing operations.

Equipment storage and service facilities account for a large portion of industrial usage, particularly for construction companies requiring both indoor storage for specialized equipment and workshop areas for maintenance and repair operations. Contractors' facilities frequently combine warehouse space with office components, creating integrated facilities that support comprehensive business operations including project management, equipment maintenance, and material storage, including some with outdoor storage. Automotive service and repair facilities have successfully adapted industrial warehouse space for specialized vehicle service operations, taking advantage of high ceiling heights, substantial 17

floor loading capacity, and efficient truck access that accommodate commercial vehicle maintenance and repair requirements.

Flex Space Flex space within the Study Area encompasses 88,947 square feet across eight buildings, creating an average facility size of 11,118 square feet that provides flexibility for businesses requiring hybrid operational capabilities combining office, warehouse, and light manufacturing functions. Most flex buildings cluster around 10,000 to 11,000 square feet with significantly less size dispersion compared to industrial properties, indicating a more standardized approach to flex space development that meets consistent market demand for mid-sized flexible facilities.

Flex space configuration emphasizes mixed-use design particularly suitable for contractors and construction-based businesses, which dominate this market segment. These facilities are primarily concentrated in the United Court portion of Blue Sky. Multi-tenant properties feature divisible bays that allow businesses flexibility to grow. This shared-cost model enables smaller businesses to access facilities without the financial commitment required for single-tenant industrial space, creating an accessible entry point for growing companies. These spaces typically do not include loading docks, reflecting their orientation toward lighter office and industrial use.

The largest flex facility demonstrates the diverse tenant mix that characterizes this market segment, housing a combination of construction, professional services, and specialized business operations. Key tenants include EG Build Construction, Schwarz Construction, Tackett Commercial Interiors Inc, Tates Creek Paving, Quality Cash Register, Patsy Hughes Disability Advocate, and Cravens Realty. This tenant composition illustrates the flex space market's ability to accommodate businesses with varying space requirements while maintaining complementary operational functions.

Another representative 11,000 square-foot facility showcases the market's capacity to serve diverse business sectors within a single property. The tenant roster includes Jones Heating & Cooling and Atlas Comfort Air representing HVAC contractors, Lexington Sound Distribution providing specialized distribution services, and Little Feet Concrete serving the construction sector, while consumer-oriented businesses include C & G Automotive for auto repair services, and Green & Grow for landscaping services.

The mix of contractors, professional services, and consumer-facing businesses creates a stable tenant base with varying lease terms and operational requirements, reducing vacancy risk while maintaining consistent occupancy levels. The variety of business types also indicates the Study Area's economic diversity and the flex space market's role in supporting small to medium-sized enterprises across multiple industry sectors.

Office and Commercial Support Characteristics Office facilities within the Study Area provide 79,351 square feet of space across 11 buildings, creating an average facility size of 7,214 square feet that accommodates professional service providers, business 18

administrative functions, and specialized commercial operations that require office environments. These facilities are typically situated on smaller parcels limited to approximately 1.5 acres, reflecting their focused function without the secondary operational requirements that characterize flex space properties. The office inventory consists of stand-alone single tenant or multi-tenant buildings. Office tenants include businesses such as auto auctions, contractors and the Teamsters local headquarters.

The retail sector encompasses 56,502 square feet across nine buildings, demonstrating a concentrated focus on essential consumer services and convenience-oriented businesses that serve both local residents, interstate travelers and the substantial daytime workforce generated by the Study Area's industrial activities. The retail composition includes entertainment and hospitality establishments such as Spearmint Rhino, a gentlemen’s club. Food service operations are well-represented through major national chains including McDonald's, Wendy's, and Dairy Queen Grill & Chill along with regional and local establishments like Hunt Brothers Pizza and MirchiMex that provide diverse dining options.

Multiple fuel service stations include BP, Speedway, Gallops, and Mustangs Mart providing essential services for the heavy commercial vehicle traffic. Specialty retail is represented by Churchill Wine & Spirits LLC. This retail mix reflects the practical service requirements of an industrial region while providing sufficient variety to support daytime commercial activity.

The five hospitality facilities encompass 370 rooms in 278,938 square feet, indicating the Study Area's role as a stopover and business destination that attracts visitors, commercial travelers, and business meetings. The hospitality footprint reflects the area's strategic positioning along I-75 and Athens Boonesboro Road.

The hospitality market spans multiple service levels and price points, beginning with economy accommodations provided by Days Inn by Wyndham Lexington and Econo Lodge, both offering two-star basic motel-style facilities that serve cost-conscious business travelers and extended-stay industrial workers. The midscale segment is represented by Comfort Inn Hamburg Area, and Upper-midscale accommodations include Hotel LEX, Trademark Collection by Wyndham and La Quinta Inn & Suites by Wyndham Lexington South. These three-star select-service properties offer indoor pools, complimentary breakfast, and fitness center facilities that cater to business travelers expecting enhanced amenities and services.

The specialty land use signifies a distinctive market niche represented by salvage auto auctions, which span over 15 acres with 36,000 square feet of constructed area, spearheaded by Copart Salvage Auto Auctions. ADESA’s automobile auction facility utilizes more than 10 acres of land, including several outdoor parking lots and storage areas to process vehicles for dealers, and recently constructed a 10,000 square-foot office building to support financial services.

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Map 5. Blue Sky Study Area Land Use By Type, 2025

Blue Sky Industrial Clusters The Study Area demonstrates specialization in several key industry clusters that have developed organically over the past five decades, creating a synergistic business ecosystem. These clusters reflect the preferences of industrial users prioritizing logistics efficiency, affordability, and access to regional labor markets. Lexington, in particular, benefits from its strategic location, strong transportation connectivity, competitive lease rates, and growing amenity base, making it an attractive environment for warehousing, distribution, and light manufacturing operations. The Study Area offers similar advantages to Lexington overall, but its sites do not provide the same amenity base as other competitive offerings within the city (see Competitive Subareas section below).

Construction and Contracting Cluster The construction and contracting sector represents the most significant industry concentration within the Study Area, encompassing electrical contracting, plumbing, roofing, masonry, insulation, and general construction services that serve both local and regional markets. Davis H Elliot Company owns an estimated eleven properties under various real estate partnerships. Within this cluster of buildings, tenants include established companies such as Davis H. Elliot Company, which operates construction 20

and electrical contracting services from multiple locations within the Study Area, alongside specialized contractors like Pearce Blackburn Roofing LLC that focus on specific construction trades. The concentration of related businesses creates significant operational synergies through shared supplier relationships, subcontracting opportunities, and collaborative workforce development initiatives that enhance the overall competitiveness of individual companies while strengthening the regional construction capacity.

Automotive Industry Cluster The automotive sector within the Study Area encompasses the full lifecycle of vehicle commerce, from new and used vehicle sales through auctions, dealerships, repair services, parts distribution, and salvage operations, creating a comprehensive automotive ecosystem that serves both regional and national markets. ADESA, one of the Study Area's largest employers, operates a major automobile auction facility that processes vehicles for dealers nationwide while providing complementary financial services, employing over 140 workers and serving as an anchor tenant that attracts related automotive businesses to the Study Area.

Supporting automotive businesses include Summit Auto Group LLC for used vehicle sales, and Lexington Auto Spring & Brake Alignment Co., which provides specialized automotive repair services. The presence of Copart Salvage Auto Auctions further demonstrates the Study Area's specialization in automotive disposition and remarketing services, creating a complete automotive value chain that handles vehicles from initial sale through end-of-life processing.

The automotive cluster includes extensive vehicle storage areas and substantial parking facilities that can accommodate the large vehicle inventories required for auction operations, dealership activities, and repair services.

Manufacturing and Industrial Services Manufacturing operations within the Study Area focus in building products, industrial equipment, and specialized manufacturing services that serve both construction and broader industrial markets throughout the region and beyond. Companies such as Rogers Windows, Inc. represent substantial manufacturing operations, producing storm windows and doors from its 36,000 square-foot facility while employing 20 workers. ISG, a sign manufacturing company located at Kingpost Court, employs 34 workers with $5.1 million in annual revenues, demonstrating successful operations in the specialized signage market that serves commercial and industrial clients across multiple states. The concrete manufacturing operations of Harrod Concrete & Stone Co., operating from the 12.9-acre facility at Jo Mars Street, provide essential building materials for regional construction projects. The diversity of manufacturing operations indicates the Study Area's operational flexibility in accommodating various types of production activities.

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Other Services The Study Area supports a growing cluster of business and professional services that serve both the local industrial base and broader regional markets. These services include real estate, investment services, professional consulting, and specialized business support functions that assist the industrial and construction companies operating within the region.

Warehouse and distribution facilities form an important component of the Study Area's industrial base, providing essential logistics infrastructure. The range of warehouse facility sizes accommodates various distribution requirements from local service operations to regional distribution centers serving multistate markets.

The former UPS facility that previously served as TForce Freight's regional hub, processed multi-state shipments and employed dozens of workers before ceasing operations. The other distribution players include Transport Specialists Inc., Flex S, and Value Wholesale Solutions Inc. Their concentration creates shared transportation services, consolidated shipping, and coordinated supply-chain management.

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III. Competitive Framework The Study Area’s success can be attributed to access to its highway network and infrastructure, particularly sewer and water. The future development will benefit from excellent visibility at I-75.

Unfortunately, the Study Area is less competitive for users that require sites in excess of 15 acres, rail spur access, technology-industry workers, and/or significant capital investment.

Competitive Subareas The Study Area competes within the Lexington-Fayette region for industrial land users and, to a lesser extent, throughout the southern and midwestern US, particularly the tri-state Ohio-Indiana-Kentucky region. Business parks attract a share of the industrial and flex user demand but stand-alone facilities for companies such as Amazon locate along major thoroughfares. The following paragraphs highlight some of the region’s most competitive business parks and industrial subareas.

The first three parks serve a higher-end market with modern industrial and flex office facilities, including research and development space. Overall, these parks offer either existing or plans for mixed-used community components at full built-out. The rents and sale prices for land remain higher than competitive locations. The higher land prices and rents for these three parks reflect both the quality of the product and the purchasing power of the target tenant base. Companies seeking modern R&D space often prioritize location quality, amenities, and facility specifications over cost savings, making them less price-sensitive than traditional industrial users.

Coldstream Research Campus The University of Kentucky Coldstream Research Campus incorporates business opportunity clusters at the northern junction of I-75 and I-64.

Representing an estimated 510 acres and more than 1.7 million square feet of space, Coldstream Research Campus currently includes the University of Kentucky Veterinary Diagnostic Laboratory (UKVDL), Kentucky Technology Center, Coldstream Center, Coldstream laboratories and private companies: Bingham McCutchen, Hewlett Packard, Kindeva, Middle Ground Capital, Somni Group (formerly Tempur Sealy) International Headquarters, and Sterile Pharma Manufacturing as well as others. Coldstream Research Campus offers both leasable office and laboratory space as well as development-ready building sites with ample utilities including high-speed data fiber.

There are more than 240 acres available for development and building sites with utilities, access to redundant power and high-speed data connections. Coldstream offers ground lease opportunities for 30 to 99 years. The four remaining sites listed as available with P-2 zoning total an estimated 50-acres on four parcels of land: 1500 McGrathiana Parkway (9.7 acres); 1501 McGrathiana Parkway (8.1 acres); 1776 McGrathiana Parkway (11.5 acres); and 1785 McGrathiana Parkway (4.2 acres).

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Legacy Business Park Lexington’s newest business park, Legacy Business Park, consists of 147 developable acres with I-1 zoning allowing for research and development, advanced manufacturing, light industrial uses and offices on the University of Kentucky’s former dairy farm. This property, nestled in the Coventry neighborhood, incorporates 19 lots, 45 acres dedicated to open space and another 20 acres set aside for internal roadways and other infrastructure. Properties in Legacy Business Park are fully improved with necessary infrastructure and offer 6,000 feet of frontage along I-64 and I-75.

The potential for development anticipates a mixture of uses with targets for high-quality industrial space, particularly related to Lexington’s key strengths in manufacturing, agtech and biotech, for companies with an existing relationship or planned partnership with University of Kentucky.

Blue Grass Business Park In 1997 after the previous urban services boundary expansion, Lexington United, a non-profit economic development group, acquired 100 acres to form a business park as a targeted location for high-wage manufacturing jobs. In 2005, Commerce Lexington purchased more land and completed key infrastructure upgrades with the goal of attracting new companies that could create $140,000 in new payroll per acre. The Blue Grass Business Park, located with frontage along Citation Boulevard and Georgetown Road, encompasses 59 acres and offers 1.9 million square feet of leasable space managed

by Brookfield Properties. As one part of a larger mixed-use development, the surrounding area offers cafes, wellness center, gym, a 37-acre stud farm and an 11-acre bird sanctuary.

The most recent light industrial addition to the property includes God’s Pantry, which recently renovated a 127,000 square-foot distribution facility originally constructed in 1998.

Leestown, Venture & West Hampton Industrial Parks The cluster of older industrial parks north and west of New Circle Road (Route 4) represent clear competition to Blue Sky. These clusters total more than 5.3 million square feet of industrial and flex space with a vacancy rate of 3.8 percent. In each of these industrial subareas, warehouse space constitutes the largest type of the space, with more than 1 million square feet in these combined areas.

Some of the available industrial spaces do not meet current users’ needs but offer critical industrial spaces. For example, Premier Development Partners markets a 63-acre site located just north of New Circle Road at 1515 Mercer with access to the Norfolk Southern rail line and I-75 and I-64 access within three miles. This property offers more than 541,000 square feet with 18- to 28-foot ceiling heights, and nine loading docks.

Leestown Industrial Business Park offers more flexible spaces with engineering, skilled trades and petrelated businesses. Some of the key businesses include Sherman Carter Barnhart and Stantec Consulting, The Bark & The Purr, and J&H Outdoors. The Commons space, located in older revitalized industrial space, offers maker spaces and a mixed-use community with residential, recreation, etc.

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Georgetown (Scott County) Located in Scott County, Georgetown offers more than 1.1 million square feet of industrial space with nearly full occupancy, reflecting the area’s excellent highway access and close proximity to the Norfolk Southern Railroad Intermodal Shipping Terminal.

Georgetown has two industrial clusters focused around the Georgetown Industrial Park and Lanes Run Business Park, which are adjacent to each other.

Originally developed to support Toyota’s Georgetown plant, the Georgetown Industrial Park, located south of Georgetown’s downtown, consists of 160 acres of industrially zoned I-1 land with utilities. The Bluegrass Community and Technical College, which offers an Advanced Manufacturing Technician program, occupies a 20-acre site.

Lanes Run Business Park, with access to Route 62 as well as I-75 and I-64, constitutes 130 acres of commercially zoned land and 24 acres of technology-designed acres (with infrastructure). The park includes traditional distribution and warehouse users as well as manufacturing companies including Bastion Solutions, Country Boy Brewing and Heartland Automation with new expansions in process.

There are few sites available for future development.

While postponed due to lack of political support, the proposed Triple Crown Regional Business Park represented a regional effort to develop a former 500-acre farm located in Scott County for future industrial development.

Most recent development includes more than 300,000 square feet of distribution space in the Georgetown Industrial Park.

Berea Industrial Park (Madison County) Approved in 2024, this multi-jurisdiction industrial park represents a redevelopment of the former Menelaus Industrial Park under a joint development authority to manage the park. The City of Berea receives a 10-percent hosting fee and each participating county receives 33 percent of the tax revenues created by the park. Federal support for the 300-acre industrial park included $5.5 million. The industrial park, located in southern Madison County with access to I-75 offers large tracts of land with a 273-acre parcel.

Other nearby industrial development activity includes the renovation of older industrial and availability of failed modern agtech ventures. The Hyster-Yale Group, purchased a 1960’s era industrial building on less than two acres and renovated in 2020. AppHarvest, sold Berea Farm’s 15-acre 2022 indoor leafy greens farm, which is now permanently closed due to bankruptcy.

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IV. Blue Sky Industrial Demand Demand for industrial and flex space reflects both trends and anticipated shifts in industrial employment with many of the existing industries present in Blue Sky maintaining or expanding operations. Review of current industrial absorption trends, real estate indicators, competitive positioning and other factors forms the basis for determining Blue Sky Study Area’s potential for future development.

Certainly, potential exists for continued development of manufacturing, warehouse distribution and flex space within the Blue Sky Study Area. The pace of this development will depend greatly on the competitive alternatives for these types of users. The existing Blue Sky industrial area will be most competitive for price-conscious industrial users and expansion of existing users.

Those companies desiring modern new facilities with interstate visibility may find the costs of greenfield development to be too high. Most regional prospects are seeking existing facilities or shovel-ready sites that can be under development in less than six months. Attracting these users will require a developer to pursue development approvals and make infrastructure improvements in advance of a potential buyer/user. Available greenfield land in the Blue Sky Study Area is constrained by the infrastructure investment necessary to address topologic and soil constraints. A public-private partnership or public incentives may be necessary to encourage such investment.

Study Area industrial developments would likely be less attractive to technology uses, such as biotechnology and pharmaceutical companies. Such firms depend on recruiting a highly skilled technical workforce that has tended to prefer more urban mixed-use locations where they can access restaurants, retail and multi-family housing, ideally proximate to downtown Lexington and the University of Kentucky.

Projected employment growth in industries that rely on industrial and flex space coupled with historic trends data suggest that the region will develop an average of 200,000 to 275,000 square feet of space annually to 2045 for a total of 4.2 to 5.8 million square feet. This does not include the potential for attracting a major user such as Toyota.

Lexington should be able to capture 35 to 40 percent of the region’s future industrial and flex space construction for a total of 1.5 to 2.3 million square feet of new space.

New industrial and flex space development in the Blue Sky Study Area could reach 200,000 to 400,000 square feet to 2045 with redevelopment of the UPS facility and other underutilized sites. Of course, actual development will depend on the availability of appropriate sites.

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VIII. Recommendations Development opportunities within the Blue Sky Study Area face significant limitations due to the extent of existing development and the limited supply of available land. The area has reached near-complete buildout, leaving few viable sites for greenfield and even infill development that would maintain the established industrial and commercial character and offer both key fiscal support to LFUCG and access to stable living wage jobs for residents.

Within Blue Sky the recently completed façade and building renovation improvements, such as those completed by Elliot Services, represent a viable and critical upgrade for this industrial community. Most recently, for example, in 2024 Elliot Services upgraded a 12,000 square-foot warehouse that offer more than 30 jobs. However, it should be noted that those property owners already receiving regular rent payments with low capital investment may not be enticed into reinvestment in the near-term.

Development Potential Property Improvement and Modernization The predominance of Class C properties in the area provides potential for value-added enhancements that can boost rental income and long-term asset value. Strategic upgrades – such as modernizing electrical systems, improving HVAC infrastructure, and incorporating energy-efficient features – can reduce operational costs while enhancing the appeal of facilities to prospective tenants. Operational upgrades such as loading dock improvements and truck court reconfiguration can improve logistical flow, safety, and functionality, particularly for distribution and manufacturing users.

There is also an opportunity for specialized facility development tailored to high-demand niches such as cold storage, food processing, and automotive service. These uses often command premium rents and provide competitive differentiation by serving tenants with specialized operational needs.

Adaptive Reuse and Redevelopment Potential Larger industrial properties in the Study Area may be suitable for subdivision into multi-tenant spaces, allowing for a diversified tenant mix and redevelopment of underutilized properties. This approach supports higher rental yields through flexible leasing strategies and broader market reach.

Additionally, conversions to flex space – combining warehouse, light manufacturing, office, and specialized service functions – can cater to a growing segment of businesses seeking hybrid operational layouts. These spaces typically achieve stronger rent performance due to their versatility and tenant appeal.

New Development and Expansion Opportunities Infill development potential within the Blue Sky Study Area is limited, with only a handful of small parcels remaining – ranging from approximately 0.75 to 5 acres. The only sizable parcel (37 acres) is the former UPS facility.

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These constraints will necessitate greater emphasis on parcel consolidation strategies and selective redevelopment of underutilized sites. Despite limited land availability, the area's strong infrastructure and low vacancy rates create favorable conditions for new industrial development that meets emerging market demands while integrating with the existing industrial fabric.

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Appendix Tables

Table A-1. Lexington and Lexington-Fayette Metro Area Employment Trends, 1970-2020 Lexington 1970 1980 1990 2000 2010 2020

99,933 133,233 172,576 208,455 220,376 241,932

Share of Metro Area

Lexington-Fayette Metro1

71.1% 72.8% 73.2% 69.4% 70.4% 69.7%

140,584 183,064 235,624 300,558 312,898 346,873

Note: 1 Lexington-Fayette Metro Area definition includes the following counties: Bourbon, Clark, Fayette, Jessamine, Scott and Woodford.

Source: Woods & Poole Economics, Inc., 2024; Partners for Economic Solutions, 2024.

Table A-7. Lexington Industrial & Flex Market Trends, 2013- June 2025 Year

Total Square Feet

Annual 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Jun-25 2015-2024 Change Amount Percent 1

Vacant Square Feet

Occupied Square Feet

Occupancy Rate

New Deliveries

Net Absorption

1

Average Rent

32,020,940 32,302,618 32,329,886 32,763,511 32,533,926 32,561,846 32,645,189 32,680,381 32,934,639 32,952,719 33,444,719 33,460,469 33,504,324

1,413,865 915,211 1,085,686 1,471,848 1,359,834 1,151,289 1,021,684 1,386,521 627,521 1,359,327 1,397,355 1,541,673 1,548,719

30,607,075 31,387,407 31,244,200 31,291,663 31,174,092 31,410,557 31,623,505 31,293,860 32,307,118 31,593,392 32,047,364 31,918,796 31,955,605

95.6% 97.2% 96.6% 95.5% 95.8% 96.5% 96.9% 95.8% 98.1% 95.9% 95.8% 95.4% 95.4%

110,794 292,543 27,268 556,972 69,240 27,920 182,223 40,340 254,258 18,080 492,000 15,750 43,855

441,594 779,032 -143,207 47,463 -117,595 236,489 212,948 -329,645 1,013,258 -713,726 453,972 -128,568 36,809

$5.37 $5.59 $5.03 $5.48 $5.35 $6.09 $6.91 $6.54 $6.41 $7.24 $7.60 $7.84 $8.68

1,130,583 3.5%

455,987 42.0%

674,596 2.2%

-1.2% -1.2%

(11,518) -42.2%

14,639

$2.81 55.9%

Note: Net of Utilities, Taxes & Maintenance.

Sources: CoStar, 2025; Partners for Economic Solutions, 2025.