When I grow up, I want to build warehouses or be an industrial property broker.
Big concrete buildings! Designed for big racks of big containers of stuff! Big metal warehouses! Made for big trucks to load and unload big loads!
Floors as wide as the prairie! Columns disappearing into the shadows of a tall ceiling. Docks and bays and truck turnarounds and just go ahead and insert Tim “the Tool man” Taylor's grunt here. Or a HOO-ah!
Big boxes! On dirt! Tilt-up concrete? Legos! What's not to like?
Thinking about it tickles my inner 8-year-old boy. Keep your fancy offices and your hoity-toity hotels and your silly, frilly stores and just how many houses can a residential broker stand to show? Give me industrial, please.
From the toy blocks, tool belts and Tonka trucks of my childhood to concrete, pallets and racks, big rigs and rail spurs in the old industrial district along Santa Fe Avenue just north of downtown or out by the airport in southwest Oklahoma City — it doesn't seem that far of a leap.
Industrial property is hit and miss. But maybe now's the time for a hit. Good absorption, stable lease rates across the metro area and rent growth in three of five submarkets the second half of last year, after several quarters of growth, have CB Richard Ellis-Oklahoma thinking positive in its year-end report.
Which means speculative industrial construction (cue dramatic music ... make that truckin' music).
Now, I know the pros in the business are rolling their eyes. But I also know they know it's true: Spec industrial development in Oklahoma City is so rare, anything of much significance is always news — once the planning and zoning is under review or a building permit's issued or some dirt has been moved or something. “Planning to” isn't always news. Doing is.
So, let me in on it. We'll get the word out. Speculative industrial construction seems to fly under most people's radar, even in economic development circles, because spec means “for lease” or “for sale,” not “We're hiring” — and because not that many of us have inner 8-year-old boys who like big boxes and dirt and big trucks and stuff.
Here are some highlights from the report from CB Richard Ellis-Oklahoma, compiled by broker Jason Hammock:
• Overall vacancy dropped from 10.75 percent last summer to 10.51 percent at year's end.
• Market rents were steady but slipped from $4.02 to $3.98 per square foot per year.
• Sale prices rose from $37.93 to $38.19 per square foot.
• Southwest, south of NW 10 and west of Interstate 35, with more than half the industrial space in the metro area: Rents down.
Vacancy slipped from 10.6 percent at midyear to 10.53 percent at year-end.
Average lease rate dropped from $4.12 to $4 per square foot.
• Southeast, with older properties driven mostly by energy-related services: Rents up.
Vacancy dropped from 10.36 percent to 9.13 percent on the strength of the oil business and out-of-state businesses moving in, or making their plans known.
Average lease rate rose from $3.60 to $3.76 per square foot.
• Northeast, which has some older properties: Rents down.
Vacancy jumped from 14.4 percent to 16.59 percent, but areas east of I-35 are poised for recovery.
Average lease rate dropped from $3.95 to $3.81 per square foot, but east of I-35 and Edmond's growth eastward “could bring in lease rates in the $5.00-$5.50 per square foot range thus increasing the health of the submarket as a whole,” according to Hammock.
• Northwest, north of NW 10 and west of Centennial Expressway/I-235, with about 10 percent of the market: Rents up.
Vacancy dropped significantly from 10.56 percent to 8.61 percent, leaving it prime for development.
Average lease rate rose from $4.10 to $4.37 per square foot.
• Central Business District, including Bricktown: Rents up.
Vacancy was unchanged at 7.51 percent.
Average lease rate rose from $4.40 to $4.50 per square foot, the highest in the metro area, thanks to downtown economic growth — although as properties are converted from industrial to other uses they will be dropped from the industrial rolls.