The North Shenandoah Valley market saw a significant uptick in leasing and construction starts during this past spring, particularly in the eastern panhandle of West Virginia and in Washington County, Maryland. In Martinsburg, West Virginia Clorox signed a 588,000 square foot built-to-suit lease for 10 years with developer Equus Capital Partners to help service their new $100 million Fresh Step manufacturing plant currently under construction off of Corning Way. Also in Martinsburg, the third-party logistics provider Hollingsworth renewed for 7 years in the Shockey Commerce Center to service a US Postal Service distribution requirement. In neighboring Jefferson County, West Virginia, an undisclosed tenant signed a 138,000 square foot lease at 69 Clendening Drive in the Burr Business Park. Much of the demand recently seen in the eastern panhandle is being driven by expanding manufacturing operations, including Procter & Gamble’s recent land acquisition of an additional 96 acres adjacent to their campus in Martinsburg.
Demand/SupplyDemand for industrial space in the North Shenandoah Valley market was positive during the quarter registering 180,563 square feet of net absorption during the second quarter of 2021. During the quarter, demand for warehouse product was 184,846 square feet, while the demand for flex product dropped slightly, returning 4,283 square feet to the market. At the end of the quarter, 4.2 million square feet was under construction. The Washington/Hagerstown market accounted for over half of that space underway.
VacancyThe market’s overall vacancy decreased from 5.1 percent to 4.8 percent during the quarter. The warehouse product vacancy dropped 30 basis points to end at 4.7 percent while flex vacancy ended the quarter at 6.2 percent. Warehouse product vacancy stood at 5.3 percent a year ago while flex vacancy was 4.3 percent at that same time.
Overall asking triple net rates in the North Shenandoah Valley market increased $0.20 during the quarter, ending at $5.28 per square foot. This compares to a year ago when the overall rental rate stood at $4.55 per square foot. Overall average rental rates for warehouse product increased $0.21 to end the quarter at $5.26 per square foot while rental rates for flex ended the quarter at $7.00 per square foot.