Historically low vacancy combined with pent-up demand in the Columbus industrial real estate market is driving new speculative construction for the first time since the Great Recession. In fact, we expect delivery of 1.8 million square feet of spec construction by the end of this year. After a six-year drought, several speculative and build-to-suit buildings, ranging from 300,000 square feet to 700,000 square feet, are in the works. More than 1 million square feet of space already has been absorbed this year — the highest amount since before the recession. The vacancy rate stands at 7.4 percent, 320 basis points lower than the historical average. Average asking rents for modern bulk buildings have risen 7 percent since last year. Cargo Air Service Advantage Rickenbacker International Airport, one of the only cargo-dedicated airports in the world, is a huge growth driver. As an important part of the global, multi-modal logistics hub, Rickenbacker Inland Port moves air cargo to, from and within the United States and has routes to Singapore, Shanghai, Hong Kong and Shannon, Ireland. FedEx Air, FedEx Ground and UPS regional hubs also are on-site. According to the U.S. Department of Commerce’s International Trade Administration (ITA), Columbus was among the …
Industrial
The New York Capital Region’s industrial market has experienced strong growth over the past 24 months, and promises a continued pattern of growth for the next 12 to 24 months. As the office market in the central business district struggles to right itself fueled by the State’s tenuous occupancy of numerous privately held properties, the industrial marketplace has flourished with extended commitments from existing users and the entrance of new users. Upstate New York is making a name for itself in the nanotech industry, and a great deal of national and international attention has been drawn to the region. In addition to activity driven by high-tech companies, national distribution and manufacturing groups have committed to the region or have focused their site searches in the Capital District. The most significant job creation mechanism in the region has been the nanotech industry. Billions of private and public sector money has been invested since 2010 into Luther Forest Technology Campus in Malta, N.Y., as well as SUNY Polytechnic Institute (also known as the Colleges of Nanoscale Science and Engineering). These facilities have placed our region firmly on the international map and have transformed the appearance of New York’s Capital Region. The strongest …
The trends in Louisville are typical of a market rebounding. According to CBRE Research, the Louisville market is experiencing rent growth, vacancy declines, construction increases and more speculative product hitting the city. Leasing volume is increasing steadily, and investment sales are peaking as well. The Louisville industrial market remains tight even with several recent construction completions. With more than 100 million square feet of industrial space in the area, Louisville is a major player in the Eastern United States distribution market. Despite several lease and sale transactions consummating in the second quarter of 2014, market vacancy increased slightly to 4 percent, which reflects the fact that several large speculative buildings came on line during the period offsetting otherwise net positive absorption. As expected, with existing industrial inventory levels at an all-time low and new building deliveries coming on line and more on the horizon, market vacancies rose to 3.9 percent in the first quarter of 2014, ending a streak of 13 consecutive quarters of declining vacancy. Louisville remains an extremely tight market, even considering the increase in the vacancy rate. In addition, compared to the percentage of total market size in neighboring cities like Columbus, Cincinnati, Indianapolis, Nashville and Memphis, …
While the industrial recovery in the Phoenix area has been slow, market indicators show signs of steady improvement. Average rental rates for the Phoenix metro industrial market have remained consistent, hovering around $0.52 per square foot for the past year. In the Southwest Valley, however, which constitutes almost one-third of the entire valley’s industrial space, average rental rates are much lower at $0.36 per square foot. Lease rates at Sky Harbor Airport are averaging about $0.59 per square foot, and $0.66 per square foot in the Southeast Valley. The highest average rental rates are predictably seen in the Northeast Valley, which reported an average of $0.85 per square foot. More than 2.9 million square feet was leased in the second quarter, representing 593 transactions. Leases remain steady compared to the first quarter of this year, but the rate will likely fall short of 2013 when 16.7 million square feet was leased. Vacancy rates continue to fall after the spike seen last year. The second quarter of 2014 reported a 12.6 percent vacancy, down from the high of 13.2 percent in the third quarter of 2013. While a positive indicator, vacancy rates in the industrial sector swing on such a pendulum …
It’s been a remarkable 18-month run in the Kansas City industrial market. Developers are being rewarded for their patience and long-term land positions, and larger tenants finally have several options from which to choose among Class-A distribution facilities. In January 2013, the vacancy rate in the Kansas City industrial market was a tight 6 percent, with barely any product available for users searching for modern distribution space of 200,000 square feet or more. At that time, I made some predictions about new construction, vacancy and absorption. Let’s review what happened. Market Drivers Kansas City recorded more than 3.5 million square feet of positive absorption in 2013 alone, adding another 800,000 square feet during the first two quarters of 2014. This demand was driven in large part by the automobile suppliers, online retailers and by governmental agencies. At mid-year, the vacancy rate for Kansas City warehouse product had fallen to 5.6 percent, well below the national average of 7.3 percent. Average lease rates have moved up to pre-recession levels, as regional distributors and third-party logistics companies attempt to secure large blocks of space for their national footprints. In 2013, the market delivered 2.4 million square feet of new industrial product, with …
Before the Great Recession of 2008 and 2009, many developers believed they could continue to build commercial product and demand would follow. But as the economy came to a screeching halt, reality kicked in and many owners and developers were stuck with product that couldn’t be sold or leased. Fast forward to 2014, and that stagnant product has slowly been absorbed as the economy has gradually recovered. From 2008 to 2014, construction of commercial real estate fizzled, resulting in lower vacancy rates and increased net absorption. Now, construction activity is beginning to increase and speculative construction is back in action. This uptick in construction and speculative development is especially apparent in the industrial real estate market. In Ohio, the industrial vacancy rate sits at an average of 6.8 percent for 962 million square feet of industrial space that Colliers|Ohio tracks in Cincinnati, Cleveland, Columbus and Dayton. Colliers|Ohio recorded more than 10 million square feet of positive absorption in 2013, and 6.9 million square feet during the first half of this year. Colliers has tracked an uptick in absorption in the industrial market for several years, and the supply of quality Class A bulk product has diminished significantly. Developers have taken …
The Central Florida industrial market (comprised of Seminole, Orange and Lake counties) is currently undergoing a transformation, one that will make the majority of property owners very happy. After suffering crippling vacancy rates from early 2008 through the end of 2011, Central Florida has rebounded solidly and the good news is that there is still time to capitalize on the opportunities. The current rebound can be attributed to several items, not in any particular order: • Increased employment opportunities: Orlando’s unemployment peaked in September of 2010 at 11.7 percent and it has steadily decreased. In April of 2014, the unemployment was at 5.2 percent, according to the U.S. Bureau of Labor Statistics. • Lack of new product / inventory: Since 2008, there have only been a handful of new, speculative industrial buildings built as demand was not there and rental rates were depressed due to the massive amount of vacancy. This has resulted in there being very few choices for companies desiring new, first generation product and led to the current new building pipeline of over 2.4 million square feet under construction as of July. • Absorption and rental rates: In 2012, we experienced positive market absorption slightly better than …
Investor money has returned to the industrial market in Las Vegas. Compressing cap rates continue to result in rising values on properties even in the hardest-hit areas of Las Vegas. Couple that with limited available industrial product, and the result is the need for today’s buyers to act quickly and competitively if they want to acquire quality properties that will deliver attractive yields. MCA Realty initially entered the Las Vegas market in mid-2011 to acquire incubator/mid-bay, multi-tenant industrial properties significantly below replacement cost. Since that time, the firm has seen a substantial shift in the number of buyers competing for this product type in this market. This increasing competition will continue to drive values up, and investors will need to rely even more heavily on their local brokerage relationships to make deals work. On the leasing side, vacancy rates continue their downward trend. Occupancy is up on all industrial product types, and confidence from business owners continues to rise. The result is increased stabilization throughout the market. A key component driving the tenant demand for multi-tenant industrial is the resurgence of hotel construction and renovation in the works on the Las Vegas Strip. This activity has created a surge of …
It should come as no surprise at this point that Orange County is on course with a robust economic recovery. Furthermore, there are favorable indicators for a steady increase in value over the next few years. Even though industrial product is limited in the county, development is picking up now that vacancy rates have been on a downward slope and rental rates continue their course on a gradual upturn. While all sectors in Orange County are seeing movement in a desirable direction, quality industrial space is becoming even more of a premium. The larger industrial spaces are drying up in Orange County. Most of the industrial spaces available today are smaller than 20,000 square feet. Meanwhile, many older buildings are being converted or remodeled to invite a variety of other property uses like residential, creative office and self-storage. The average asking price for investment-grade industrial properties of more than 20,000 square feet in Orange County is at $147 per square foot, as of the halfway point through the second quarter of 2014. This number has been on the rise year-over-year since the drop at the end of 2010 when the average asking price dipped to $120 per square foot. The …
Comprising approximately 155 million square feet of industrial space, the Baltimore industrial market continues to recover, albeit gradually, from the recession. Key drivers for the Baltimore metropolitan area include the Port of Baltimore, proximity to Washington, D.C., and direct accessibility to Interstate 95 and the major population centers along the Eastern seaboard. As of the end of the first quarter, the vacancy rate for the Baltimore industrial market was 9 percent, which is down from 13.3 percent at the depth of the recession. Vacant inventory has been gradually absorbed since the recession and market fundamentals continue to improve. Industrial product continues to be a favored asset class, and Baltimore is deemed to be a “core” market among private and public institutional investors. Rental Rates Warehouse rental rates throughout the Baltimore metropolitan market have increased from 2010 to 2014 as the local and national economy continues its slow recovery. Overall asking rates on a triple-net basis have increased approximately $1 per square foot since 2010 as the average asking rate for bulk industrial product was at $5.22 per square foot as of the first quarter of this year. As the vacancy rate has dropped in recent years, landlords have held firmer …