The hit-and-miss economic recovery is hitting Oklahoma City industrial property.
What's going missing is the industrial property.
Industrial users sucked up space in the first quarter. Tenants took more than 600,000 square feet of space off the market and put it in use the first three months of the year, compared to 350,000 square feet in all of 2011, according to Independence, Mo.-based Xceligent Inc.
“This continued momentum has reduced the vacancy rate down to 8.3 percent, with concerns that (the city is) quickly running out of inventory,” reported Xceligent, a national online real estate data company that tracks Oklahoma City and other U.S. markets using data and analysis by local brokers.
Rising lease rates?
Xceligent's first-quarter industrial trends summary reported a vacancy of 4.5 percent in bulk warehouse buildings; 17.7 percent in warehouse-distribution centers; 7.2 percent in flex buildings; 6.2 percent in light industrial buildings — and zero vacancy in manufacturing facilities.
Across all categories, the average lease rate was $4.58 per square foot per year, Xceligent reported, “but OKC could be on the cusp of strong rental rate increases by landlords with some signs of this already in the southwest submarket.”
Energy-related companies were the main driver in the first quarter but weren't the only major users, said Brian Hunt, Xceligent's regional director for Oklahoma. Some brokers say speculative building could be ahead, he said.
For example, Quad Graphics leased 164,000 square feet in a 312,000-square-foot distribution warehouse at 6801 S Air Depot Blvd. Sussex, Wis.-based Quad Graphics uses the space for warehousing paper products and staging materials for its manufacturing and printing plant on Sunnylane Avenue, said broker Gerald L. Gamble, who negotiated the long-term lease.
City lacks space
Would-be industrial firms wanting to locate in Oklahoma City find the acreage offerings lacking, said Robin Roberts Krieger, executive vice president of economic development of the Greater Oklahoma City Chamber of Commerce.
As sprawling as Oklahoma City is, with as much open acreage as it has, little of it is ready or available for industrial users need
The regional energy boom and first-quarter economic recovery in the country as a whole — which has since dissipated — hit industrial property across all categories, said Bob Puckett, broker with Price Edwards & Co.
“Oklahoma City is emerging from the recession without an excess of vacant industrial properties,” said Puckett, one of numerous brokers who participate in Xceligent's quarterly meetings. “The influx of oil-field-related service companies has resulted in absorption of smaller, single-tenant buildings. At the same time, resurgence in the national economy and long-delayed expansion by larger local firms is providing growth and absorption in larger single and multitenant properties.”
Oklahoma City is emerging from the recession without an excess of vacant industrial properties. The influx of oil-field-related service companies has resulted in absorption of smaller, single-tenant buildings.”