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North Shenandoah Valley Industrial Report Report Q2 2021

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Overview

  

 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.


The past quarter was also active on the construction front with over 1.9 million square feet breaking ground in Washington County, Maryland and in Warren County, Virginia near the Virginia Inland Port. In Washington County, development firm Panattoni broke ground on the 730,000 square foot Creekside Logistics Center near the intersection of Route 40 and Greencastle Pike that will deliver next spring. Also on the same timeline is the 825,000 square-foot Hagerstown Crossroads at I-81 facility which is being developed by Penzance south of the I-70 and I-81 interchange. Further south near Front Royal in Warren County, Virginia, Equus Capital Partners broke ground on a 340,000 square foot distribution warehouse near the Virginia Inland Port off Route 522. As of June, there was roughly 4.15 million square feet of both speculative warehouse as well as build-to-suit construction underway along the corridor.


Asking rates increased across the board over the past 6 months with the average asking market rate now at $5.28 NNN. Part of this trend resulted from a lack of available Class A warehouse space coupled with rising contract rents that are steadily climbing north of $5.00 NNN.


Demand/Supply

Demand 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.  

Vacancy

The 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.  

Rental Rates

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.


warehouse

North Shenandoah Valley Industrial Report Report Q2 2021

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