Last month I provided a review of the current Retail real estate market where many of us look for a sign of economic vitality. This month I want to provide a window into the local Industrial real estate market. Industrial real estate typically follows Retail by 6 months while it adjusts to demands for manufacturing activity or supply- chain inventories. It shows what industry is anticipating in terms of public demand.
We have been seeing high demand and low vacancy rates develop over the last 3 years and particularly a spike in pricing over the last 12 months due in part to an uncertain political landscape, concerns over global economies and OPEC Oil pricing. But by and large, the U.S. has been doing well and appears to be on a solid footing for now. I believe the Industrial real estate market in Portland will continue to remain stable through the remainder of the year. We will have a much better idea of what to expect when we know who will be sitting in the White House and what happens to oil prices. We are in a good place at this point and perhaps the only area of concern might be the shortage of availability.
The following is a brief review of where we stand at the moment:
- Total Industrial inventory in the Greater Portland Metro Area amounted to 201,072,105 square feet in 6,055 buildings at the end of the Fourth Quarter 2015. The Flex sector consisted of 20,971,087 square feet in 810 projects.
- The Warehouse sector comprised 180,101,018 square feet in 5,245 buildings. 471 owner-occupied buildings accounted for 35,424,077 square feet of Industrial space.
- The Average 2015 Portland Industrial market ended 2015 with a vacancy rate of 4.8% and rental rates ended the fourth quarter at $7.09 per square foot per year ($0.59sf/mo.).
A closer look at the industrial market is represented by Airport Way and Columbia Corridor properties:
Warehouse Market Statistics
Airport Way vacancy stands at 1.3% with rental rates quoted at $6.33/yr. ($0.527/sf/mo.)
East Columbia Corridor vacancy is 6.3% with rental rates quoted at $6.70/sf/yr. ($0.558/sf/mo.)
Flex Submarket Statistics
Airport Way vacancy is at 10.5% with rental rates quoted at $11.17/sf/yr. ($0.93/sf/mo.)
East Columbia Corridor vacancy is 5.8% with rental rates quoted at $14.18/sf/yr. ($1.18/sf/mo.)
The average price per square foot equated to $72.83 per square foot. Cap rates were lower in 2015, averaging 6.68% compared to the previous year when they averaged 7.09%. However, to put this in perspective, a modern 20,000 sq. ft. general- purpose warehouse building will fetch closer to $110/sf compared to $85/sf in 2008.
For additional information please call Isaac Quintero, Principal Broker Magellan Properties, llc at 503 351 4585.