posted on August 12, 2011 14:37
Austin’s industrial market closed the second quarter with a 13.5 percent vacancy rate, according to a new report by Grubb & Ellis Co. The report said the market absorbed 208,374 square feet in the second quarter, raising the area’s positive net absorption for the year to 313,512 square feet.
Warehouse-distribution and research and distribution-flex space saw 154,509 and 88,338 square feet of positive net absorption, respectively, while the general property sector saw 33,472 square feet of negative net absorption, according to Grubb & Ellis.
The north market experienced the most positive absorption with 166,873 square feet. The sector’s activity was led by big deals involving the Texas Department of Transportation,Kodiak Assembly Solutions LLC , Floor King Inc. and Trillium US Inc. moving into a combined 55,000 square feet.
Trends in lease rates varied among industrial space sectors. Asking rental rates for warehouse-distribution space citywide averaged $5.77 per square foot during the second quarter, down 19 cents from the previous quarter, Grubb & Ellis reported. Similarly, asking rental rates for general industrial space decreased 10 cents to $5.77 per square foot. During the same period, however, asking rental rates for research and development-flex increased by 21 cents to $9.43 per square foot.
About 663,000 square feet of space was under construction at the end of the second quarter, according to Grubb & Ellis. That includes a 290,000-square-foot distribution facility and Data Foundry Inc.’s 250,000-square-foot data center.
Despite falling vacancy rates, Grubb & Ellis expects Austin’s industrial sector to remain a tenant’s market for one to two years. Meanwhile, demand will likely accelerate and lead to planned speculative construction projects.
8/2/11, Cody Lyon, Austin Business Journal