The need for industrial real estate space went up in 2013, climbing for the fourth consecutive year. And experts believe the trend will continue in 2014.
That's the message in this year's Northeast Indiana Industrial Survey, put out Thursday by The Zacher Co.
Speculative construction is on the rise in the region, comprising Adams, Allen, DeKalb, Huntington, LaGrange, Noble, Steuben, Wabash, Wells and Whitley counties.
"More users are taking space than space is becoming available," said Steven Zacher, president and principle broker at The Zacher Co.
Companies are gobbling up what vacant space is available and are building more buildings to accommodate their needs, he said.
By the end of 2013, the vacancy rate in northeast Indiana was historically low – at 5.82 percent, according to the survey. That is down from 6.85 percent at the end of 2012.
If you are in the market for a new space for your business, that's bad news. It means your options are limited, and you are going to pay more, Zacher said.
The vacancy rate is good news if you are selling or leasing a building, though, because it will bring in more money, he said.
The area's industrial base consists primarily of automotive, housing and manufacturing – all areas on an upward trajectory nationally, Zacher said.
In 2013, more than 2 million square feet of industrial real estate was built, bringing the total inventory of industrial space to more than 100.3 million square feet.
Some of that new construction was speculative – built without a specific customer in mind – such as buildings in the Interstate Industrial Park in Fort Wayne and industrial parks in Columbia City and Bluffton, Zacher said.
Notable transactions in 2013 included the 526,000-square-foot building constructed in Wabash County to accommodate Living Essentials' 5-Hour Energy plant. Procter & Gamble leased a 763,861-square-foot building in Fort Wayne, according to the survey.
The survey predicts sale prices and lease rates to continue to increase as more build-to-suit developments occur with expanding businesses unable to get what they need from existing buildings.
The annual report, put out by Zacher and its affiliate, CORFAC International, is a compilation of data from multiple major listings services, brokers' listings and industry knowledge.
Cost of expansion
|Square feet||Sales price||Triple net lease*||Construction rates||Vacancy indicators|
|More than 250,000||$8-$11||$1.90-$2.30||$26-$30||Moderate undersupply|
|Less than 5,000||$30-$38||$4.50-$5.50||$41-$47||Moderate oversupply|
|High tech / R&D||$22-$30||$3.75-$4.75||$45-$55||Undersupply|
|*In our market, triple net means then tenant is responsible for all operating costs such as real estate taxes, building insurance, interior and exterior maintenance and repairs. The landlord is responsible for roof and structure.|
|Source: The Zacher Co. 2014 Northeast Indiana Industrial Survey|