First-quarter real estate market reports are starting to hit inboxes today, and so far there have been few shocks.
On the industrial side, Cassidy Turley's research team says things are being driven by Wilson County's emergence as the new logistical center for the Midstate. The three largest lease moves in the quarter — two CEVA moves in Beckwith Farms and Starbucks for Park 840 — totaled nearly 1.8 million square feet and all were in the Wilson County-dominated East submarket.
Overall, industrial asking rates are starting to creep up — hitting an average of $3.55 per square foot, up 45 cents from the low in 2010. Check out the full report here.
On the office side, most movement appears to be on the horizon. Brokers are aware of big moves by Tractor Supply, LifePoint, HCA and AmSurg, which will open up some square footage ... eventually. The large tracts for new development are controlled by a small number of developers, described as "historically conservative."
Site clearing and infrastructure work has begun on several sites after developers paused to see the economic woes shake out. With the recent demand for quality by many users, Class A vacancy is at an all-time low of 5.2% and the pressure has shifted to add speculative space. The current end user wants LEED certification, high end finishes, and more efficient floorplates to accommodate modern day space utilization.
There was very little movement in office in 1Q and there's little available space in 2Q. As a result, asking rates in Green Hills are topping $30 per square foot. For more on that stat and others, check out the full office report.
The Maury County Industrial Development Board has postponed a decision on whether to move forward with plans to develop a business park that would cover nearly 200 acres on Bear Creek Pike off Interstate 65 east of Columbia. Kelly Quimby at the Daily Herald has more on the need for partners to commit and the other hurdles county officials must clear.
And these problems don’t even begin to address the problem with the bedrock covering much of the potential site. Harris said the rock and topography present a “huge challenge” to the property’s development.
“We’re going to end up around over $50,000 an acre invested in this property,” Harris said. “We’re going to be able to potentially sell it for around $15,000 (per acre). It takes a lot of commitment from the governments to make that make sense.”
Users of Nashville-area industrial real estate signed on for 1.2 million square feet in the third quarter, a nice jump from a tepid Q2. Lease rates are rising steadily, too, but the research and brokerage team at Cassidy Turley say the absorption numbers need to be put into proper perspective.
While this number is impressive, it is inclusive of several short term deals, a trend we are currently seeing as companies have difficulty forecasting their long term plans while facing the headwinds of economic uncertainty. Short term leases are much easier to approve at the C-level than longer term financial commitments.
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