market report 2016 q3 industrial
TRANSCRIPT
100 Grandville Ave SW Suite 100Grand Rapids, MI 49503616. 776. 0100 www.naiwwm.com
*Also serving the Kalamazoo & Southwest Michiganareas from our Kalamazoo office*
Wisinski ofWest Michigan
Office • Industrial • Retail • Multi-Family
Industrial Market ReportWest Michigan Q3 - 2016
Prices Continue to Rise AsInventory Remains Scarce
* The information contained herein has been given to us by sources we deem reliable. We have no reason to doubt its accuracy, however, we do not make any guarantees. All information should be verified before relying thereon.
* Source: NAIWisinskiofWestMI, CoStar Property®, & U.S. Bureau of Labor Statistics
“3Q16 has seen the lowest vacancy rates of the year at 2.5%. Landlords and Sellers are able to aggressively negotiate. The lack of supply is driving lease and sale prices upward and we are seeing a continued increase in vacant land sales.”
GRAND RAPIDS, MI
The Market
- Kurt Kunst, CCIM, SIORPrincipal | NAI Member
The West Michigan Industrial Market remained hot in the 3rd quarter, characterized by many of the same key indicators we’ve been seeing all year. After a brief “summer slowdown” at the beginning of the 3rd quarter, which was propelled by some of the best summer weather we’ve experienced in recent years, the market picked back up right where it left off.
Vacancy rates have declined each quarter in 2016 - From 4.1% in 1Q, to 3.32% in 2Q, to now a remarkable low of 2.5% in 3Q. Low vacancy rates mean that inventory levels are extremely low in the West Michigan industrial marketplace. With inventory levels low, companies are forced to consider other options to meet their real estate needs. Some companies are moving to buildings that are outside of their geo-graphic preference. Many other companies are choosing to purchase land so they can construct a building to meet their needs. This is evi-denced by a sharp increase in vacant land transactions so far in 2016.
The shortage of supply and increasing demand has made it a great market for Sellers and Landlords. Lease rates and sale prices con-tinue to escalate. Landlords can be tough in negotiations by limiting their concessions, and Sellers are able to achieve higher prices than we have seen in years. Quality listings are moving quickly, despite the increased lease rates and sales prices. As an example, we recently listed an aggressively priced industrial building in a sector that has strong demand. 48 hours after the property was listed, we had a full price cash offer and interest from several other companies. We proj-ect the fundamentals of the market to remain strong in the 4th quarter.
IndustrialSales & LeasesQ3 2016
4901 Clay Ave. SW200,732 SF $31.63- Price Per Square Foot
SOLDCommercial Real Estate Services, Worldwide.
Wisinski ofWest Michigan
320 Hall St. SW205,030 SF$16.66- Price Per Square Foot
SOLD
449 Howard Ave. 110,500 SF$22.58- Price Per Square Foot
SOLD
4053 Brockton Dr. SE25,176 SFThe Gluten Free Bar
7357 Expressway Dr.40,000 SFNew West Aldelano Corporation
7994 Clyde Park5,400 SFKent Companies Inc.
LEASED
LEASED
LEASED
West MichiganIndustrial Submarket Statistics
Industrial Statistical Changes
CONSTRUCTION
CONSTRUCTION
ASKING RATES
ASKING RATES
VACANCY RATE
VACANCY RATE
NET ABSORPTION
NET ABSORPTION
3Q15 vs. 3Q16
2Q16 vs. 3Q16
2016 Q3 Snapshot Submarket Total RBA Vacant
Available SFVacancy
RateTotal Average
NNN Rate ($/SF/Yr)Total Net
Absorption (SF)
LakeshoreWarehouse 9,793,128 147,833 1.5% $4.22 44,751Manufacturing 24,196,695 766,978 3.2% $2.40 42,732Hightech Flex 1,002,287 3,093 0.3% $6.07 5,000Total 34,992,110 917,904 2.6% $3.01 92,483NortheastWarehouse 4,859.792 59,590 1.2% $4.04 6
Manufacturing 7,159,112 327,905 4.6% $2.63 15,648Hightech Flex 565,606 3,690 0.7% $5.31 -3,690Total 12,584,510 391,185 3.1% $3.29 11,964NorthwestWarehouse 4,429,108 185,115 4.2% $3.42 45,504Manufacturing 12,751,134 364,415 2.9% $3.22 1,390Hightech Flex 1,208,188 - - $7.25 -Total 18,388,430 549,530 3.0% $3.53 46,894SoutheastWarehouse 21,904,910 537,954 2.5% $3.43 110,849Manufacturing 26,017,047 817,446 3.1% $4.05 171,991
Hightech Flex 3,038,832 160,862 5.3% $5.59 -36,971Total 50,960,789 1,516,262 3.0% $3.88 245,869SouthwestWarehouse 8,017,889 71,690 0.9% $2.94 5,858Manufacturing 21,954,488 174,713 0.8% $3.60 39,427Hightech Flex 763,400 18,680 2.4% $6.99 7,193Total 30,735,777 265,083 0.8% $3.51 52,478
Total Overall 147,661,616 3,639,962 2.50% $3.50 228,405
Last Quarter vs. This Quarter
Last Year vs. This Year
*Disclaimer: Historical data figures are subject to change based upon the timing of when CoStar receives market information. NAIWWM uses the numbers available at the time each quarterly report is published.
Industrial Total Market Report
22
$0.00$2.00$4.00$6.00$8.00
2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q12 015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3
Triple Net Rental Rates
Triple Net Rental Rates- Warehouse Triple Net Rental Rates- Manufacturing Triple Net Rental Rates- Hightech Flex
0.00
100,000.00
200,000.00
300,000.00
400,000.00
2014Q1 2014Q22 014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q32
2
-100,000150,000400,000650,000
2014Q1 2014Q2 2014Q32 014Q42 015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q22 016Q3
RBA Delivered Warehouse RBA Delivered Manufacturing
RBA Delivered Hightech Flex
222
0.00%2.00%4.00%6.00%8.00%
2014Q1 2014Q22 014Q32 014Q4 2015Q12 015Q22 015Q3 2015Q4 2016Q1 2016 Q2 2016Q3
Vacancy Rate
Vacancy Rates- Warehouse Vacancy Rates- Manufacturing Vacancy Rates- Hightech Flex
2222
Methodology | Definitions | Submarket Map
Rental RateThe annual costs of occupancy for a particularspace quoted on a per square foot basis.
Under ConstructionBuildings in a state of construction, up until they receive their certificate of occupancy. In order for CoStar to consider a building under construction, the site must have a concrete foundation in place.
Existing InventoryThe square footage of buildings that have received a certificate of occupancy and are able to be occupied by tenants. It does not include space in buildings that are either planned,under construction or under renovation.
Vacancy RateAll physically unoccupied lease space, either direct or sublease.
Flex Building A type of building designed to be versatile, which may be used in combination with office (corporate headquarters),research and development, quasi-retail sales, and including but not limited to industrial, warehouse, and distribution uses. A typical flex building will be one or two stories with at least half of the rentable area being used as office space, have ceiling heights of 16 feet or less, and have some type of drive-in door, even though the door may be glassed in or sealed off.
Industrial Building A type of building(s) adapted for a combination of uses such as assemblage, processing, and/ or manufacturing products from raw materials or fabricated parts. Additional uses include warehousing, distribution, and maintenance facilities.
Absorption (Net)The change in occupied space in a given time period.
Available Square FootageNet rentable area considered available for lease; excludes sublease space.
Average Asking Rental RateRental rate as quoted from each building’s owner/management company. For office space, a full service rate was requested; for retail, a triple net rate requested; for industrial, a NN basis.
Net Rental RateA rental rate that excludes certain expenses that a tenant could incur in occupying office space. Such expenses are expected to be paid directly by the tenant and may include janitorial costs, electricity, utilities, taxes, insurance and other related costs.
Price/SFCalculated by dividing the price of a building (either sales price or asking sales price) by the Rentable Building Area (RBA).
Multi-TenantBuildings that house more than one tenant at a given time. Usually, multi-tenant buildings were designed and built to accommodate many different floor plans and designs for different needs.
Price/SFCalculated by dividing the price of a building (either sales price or asking sales price) by the Rentable Building Area (RBA).
RBARentable Building Area -Mainly used for office and industrial
Southwest
Northeast
Southeast
Northwest
Lakeshore
All Industrial building types are included, including warehouse, flex / research development,distribution manufacturing, industrial showroom, and service buildings, in both single-tenant and multi-tenant buildings, including owner-occupied buildings.
Methodology
Doug Taatjes, CCIM, SIOR616 292 [email protected]
Chris Prins616 242 [email protected]
Kara Schroer 269 459 [email protected]
David Smies, CCIM, SIOR616 242 [email protected]
Jeremy Veenstra616 242 [email protected]
Chadwick Versluis, SIOR616 242 [email protected]
Stanley Wisinski III, SIOR, CCIM616 575 [email protected] Marc Tourangeau, MBA269 207 [email protected]
Cameron Timmer616 485 [email protected]
Meet Our Team
In the spring of 2011, two successful and reputable companies, The Wisinski Group and NAI West Michigan merged. The merger represents collaboration, rich traditions, innovative technologies, unique cultures and diversity of skills and specialties which ultimately benefit our clients. We’re going back to our fundamentals, strengthening our core and becoming stronger in the services we provide our clients. Our focus is simple, build-ing client relationships for life by offering market appropriate advice and then executing. Our success is a direct result of its unwavering commitment to providing the best possible service to each and every client. Our Bro-kers, with their 590 plus years of combined experience (22 years average), possess the knowledge and exper-tise to manage the most complex transactions in industrial, office, retail, and multifamily specialities throughout West Michigan.
Through our affiliation with NAI Global, we can also assist you with your commercial real estate needs throughout the US & globally from right here in West Michigan.
NAI Wisinski of West MichiganAt a Glance
Achieve More.Local Knowledge. Global Reach.
Industrial SpecialistsJim Badaluco, SIOR616 450 [email protected]
Dane Davis269 459 [email protected]
Stuart Kingma, SIOR616 575 [email protected]
Kurt Kunst, SIOR, CCIM 616 242 [email protected]
100 Grandville Ave SW Suite 100Grand Rapids, MI 49503616. 776. 0100 www.naiwwm.com
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Wisinski ofWest Michigan
Office • Industrial • Retail • Multi-Family