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Bob Clark, News Radio 770 KKOB: Walt, you wanted to start with the industrial market, what is the latest with Industrial real estate.
Good morning Bob. There was a little rally in the industrial leasing market, unfortunately, it has reversed its trend and vacancies are heading upward again. The hardest hit buildings are the older buildings that have some functional obsolescence, a real estate term for old, and flex buildings which are used for research and development.
Vacancies have climbed from 8.6% to 9.1% in the second quarter; this is still less than the high of 11.2% in 2005 so hopefully this is a temporary event.
There were a couple of vacancies that affected the industrial lease market; one was Express Scripts vacating 71,000 feet at 4500 Alexander. The Wildfire TV series lease expired in Rio Rancho at the Fulcrum building and that brought 68,313 square feet on to the market.
Bob: What are industrial spaces leasing for in this market?
Unfortunately we have seen a substantial drop in rental rate since 2008 and the overall average asking rate is around $5.60/sf/yr. Downtown rates are under $4/sf/yr which is substantially lower than the north I-25 rates of $6.33/sf/yr.
Bob: What else do you have for us today?
I wanted to comment briefly on a Data Digest report that came out last week. The good news is that on balance economic activity continues to increase. Unemployment rates were lower in about half of the metropolitan areas tracked by the report, unfortunately, many areas were up in unemployment.
The construction industry continues to be hammered by job losses. Many companies in all areas are starting to feel the burden of higher unemployment insurance which will be a continued drag on companies as they have to shell out additional taxes for unemployment insurance to pay for the prolonged duration of high unemployment rates. As this recovery continues these increased tax burdens place on businesses and especially small businesses will continue to hamper company’s abilities to invest in their businesses, which causes them to put off or re-evaluate real estate decisions regarding leasing or purchasing commercial real estate.
Bob: How can people get contact you today if they have any questions or want to talk further about your comments today?
Bob thanks, call me Walt Arnold on my direct line at (505) 256-1255 or check us out on the web at waltarnold.com. At Sperry Van Ness we help people make wise real estate decisions in these tough times. We are in some tough times; let’s make the best of it. There is always opportunity in any market. Sperry Van Ness is a full service national commercial real estate company that specializes in sales, leasing, property management, tenant representation, accelerated marketing and site selection. Have a great week.
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