|
The regional vacancy rate in the industrial market jumped to 11.6% at the end of the second quarter from 10.2% at the end of 2008. Outside of the I-81 corridor, new construction both completed and underway, was almost entirely build-to-suit.
Speculative construction completions and space coming back onto the market far outpaced demand.
Some markets have been hit much harder than others by the economic downturn. New Castle County is being severely impacted by the closing of the Chrysler, General Motors and Avon operations. By contrast, the Lehigh Valley had a comparatively strong showing with 2.0 million square feet of absorption.
The market was very slow at the end 2008 and the first quarter of 2009, but the number of companies looking for space began to increase during the second quarter. A portion of this was opportunistic activity as tenants use the market to their advantage to shop for space to relocate or potentially consolidate operations. There were few large regional tenants in the market as compared to recent years.
Asking rents have decreased approximately 7%. This is partly due to the increase in the number of vacancies over 100,000 square feet. Signing rents, particularly for bulk space, have decreased, and free rent and other concessions are prevalent. Landlords are doing whatever they can to sign and hold on to credit worthy tenants.
Investment sales activity was completely stalled. There was user sale activity, but this was significantly lower than in the previous three years. Sale prices have decreased, but with the low volume of sales, it is difficult to quantify just how much prices have dropped. As sellers’ expectations have become more realistic, potential buyers are still waiting for prices to drop or are making low offers, maintaining a pricing gap.
Unlike the office market, the industrial market peaked more quickly after the 2001-2002 downturn, reaching 13.8% in the fourth quarter of 2002. Industrial vacancy may be near its peak, but the recovery will be slow.
 back to top
|