Industrial Report Q3 2013
NAI Michael’s Industrial Market Report for Q3 in 2013 is available!
Here’s a quick overview:
The industrial market in Prince George’s County is seeing an abundance of new construction after two years of increased activity in the market, most of which is focused in the Central Sub-markets which include the Cheverly and Landover/Largo submarkets. This new construction is a result of declining vacancy due to several hundred thousand square feet of positive absorption in the submarket that had reduced sub-market vacancy to 6.1% as of Q1 2013. Currently, the overall Prince George’s County Industrial vacancy rate is 8.3% due to the delivery of new industrial space to the market.
Atapco has delivered two new buildings at Steeple Chase 95 (92K & 43K sf respectively) and has plans to deliver an additional 180K s/f of Class “A” industrial space in one buildings. Atapco’s 92K sf building has recently been fully leased to HD Supply Company. The Merchants Terminal site (adjacent to Cabin Branch) was purchased by a partnership between Chesapeake Real Estate, Oakmont and Carlyle and was recently delivered, adding 360,550 sf of vacant Class “A” industrial space known as the Landover Logistics Center. The final 77K sf of Lincoln Property Company’s 150K sf building (Lincoln 495) was recently leased by Uni-Select. Lincoln Property Company sold the Class “A” warehouse for $107 per sf to TIAA-CREF in Q2 2013. Pannatoni has plans to build an approximately 220K sf spec building in Bowie at their Collington site which should be delivered late 2014.
Jackson Shaw has teamed up with Prudential to build a 124,950 sf Class “A” spec building at Andrews Federal Campus which will begin construction in 2014. The older Class “B” product in the Cheverly market has been fully leased due in great part to Nash Finch absorbing the remaining 365K sf in Wolf Commerce Center (6304 Sheriff Road) and GSA absorbing the remaining 43,000 sf at 6500 Sheriff Road for the Department of Transportation.
Rates continue to hold steady in this sub-market (in part due to the previous lack of new construction). Class “A” warehouse space is leasing in the $6-$7 per sf range while older product is leasing in the $4.50-$5.50 per sf range on a triple net basis. NAI Michael Company is forecasting an increase of over 1M sf of new industrial space in 2014, with rents north of $6 per sf and up to $7.50 for smaller bay deals in the new Class “A” product. The lack of competing vacant Class “B” and “C” space should push rents for larger blocks of vacant space up in the immediate sub-market for users who must be Capital Beltway adjacent. Users who are less location reliant will focus out the Baltimore Corridor or in suburban Prince Georges County where rates 10-15% lower can be achieved due to less expensive land and more abundant supply.
A full version of the report can be found here.