In a rare recent quarter for the I-81/78 Corridor industrial market, no new supply was added to the market over the past 90 days. This, coupled with another quarter of demand growth acceleration, dropped vacancy to 8.2%, its lowest level since well before the start of the last recession, as reported in Newmark Grubb Knight Frank’s Q2 2013 I-81/78 Corridor industrial research report. The lack of delivered space this quarter is no indication of a slowing construction pipeline, which actually grew by over 570,000 square feet during this quarter.
From a capital markets perspective, REITs have taken notice of this market’s stability as these ownership types constitute over half of the recent buyers in the market. Duke’s acquisition of 400 1st Avenue, where Sears is a long-term tenant, and Industrial Income Trust’s purchase of 3300 Espresso Way, where Ollie’s Bargain Basement is the single-occupier, underscores investor’s appetite for stabilized assets with good credit tenants.
Key statistics for the I-81/78 Corridor industrial market during the second quarter of 2013 are as follows:
• Vacancy Rate: 8.2%
• Absorption: 2,218,886 Square Feet
• Average Asking Rent: $3.70/SF NNN
• Warehouse/Distribution Asking Rent: $3.58/SF NNN
• R&D/flex Asking Rent: $6.79/SF NNN
Looking forward, improving consumer confidence and relatively low fuel costs will continue to attract demand for warehouse space along the I-81/78 Corridor. With no indication that tax increases, rising interest rates or sequester spending cuts will put the brakes on the economy, the steady march of economic improvement will continue to translate into strengthening fundamentals for this market.
To access the full report, visit www.ngkf.com/research.
To speak with a local market expert, please contact Mira Matic at email@example.com.
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