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Shenandoah Valley Industrial Report Report Q1 2021

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 Leasing velocity in the market slowed in Q1 2021 after a strong end of 2020. There are numerous transactions, including build to suits, which are currently in progress or close to signing. One of the most notable leases during the quarter was at Hagerstown Logistics Center where Herbalife signed for 177,000 square feet.

In Hagerstown, a “land rush” is underway and new speculative projects are on the horizon expected to break ground by year end or in early ’22 depending on approvals. With approvals already in hand, Equus Capital Partners is poised to be the most active in the near term with plans to break ground on two buildings, one near Procter & Gamble in Berkeley County, WV and the other near the Virginia Inland Port in Warren County, VA. The 340,000 square feet and 325,000 square feet sized buildings, respectively, will deliver about this time in 2022.

Other major land sites poised for near term development are Gerald Hines’ Tabler Station Logistics Park in West Virginia and Penzance’s proposed project in the Washington/Hagerstown area. In addition, Shockey Companies may break ground on another speculative project this year in their Greystone Industrial Park in Winchester. Hines plans to construct two 325,000 square foot buildings and Penzance will break ground soon on a single building of 825,000 square feet. Shockey will most likely build something in the range of 200,000-250,000 sf.

We expect a robust list of completed transactions to report in Q2. This is expected to continue to drive rates which, for all intents and purposes, have now moved above the $5 NNN asking rate for Class A in the northern portion of the market. It’s all about speed to market now and the development community is responding to a steady and increasing demand from tenants growing, consolidating and coming into the area for the first time. All this bodes well for a strong remainder of 2021 into 2022.


Demand for industrial space in the Shenandoah Valley market continued during the first quarter of 2021, with 468,167 square feet of net absorption. During the quarter, demand for warehouse product was 523,332 square feet, while the demand for flex product dropped slightly, giving back 55,165 square feet to the market. At the end of the quarter, 1.64 million square feet was under construction. One building delivered during the quarter. 190 Admiral Byrd Drive, a 90,000 square foot warehouse delivered in the Frederick/Winchester area.  


The market’s overall vacancy decreased 40 basis points to end the quarter at 5.0 percent. The warehouse product vacancy dropped 50 basis points to end at 4.9 percent while flex vacancy ended the quarter at 7.2 percent. Warehouse product vacancy stood at 5.6 percent a year ago while flex vacancy was 4.4 percent at that same time. 

Rental Rates

Overall asking triple net rates in the Shenandoah Valley market increased $0.35 during the quarter, ending at $4.56 per square foot. This compares to a year ago when the overall rental rate stood at $4.32 per square foot. Overall average rental rates for warehouse product increased $0.37 as well to end the quarter at $4.54 per square foot. Class A warehouse product is still seeing rates closer to $4.75-$5.00 per square foot in the market.


Shenandoah Valley Industrial Report Report Q1 2021

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