The Oklahoma City multi-tenant industrial market, for the first time since this report began, calculates vacancies in all three product types within a range of approximately one percentage point. The overall multi-tenant vacancy is 8.72% which also correlates well with the overall total industrial market (single-tenant, multi-tenant, and owner-occupied) vacancy of 8.9% (Xceligent 1st Qtr. 2014). Accompanying this is the projected commencement of significant speculative construction in the fall of 2014 of 150,000 square feet of bulk warehouse space at 6900 N. Bryant. Pending construction beginning this Fall, modern bulk warehouse spaces over 75,000 square feet are simply unavailable in Oklahoma City at this time. This creates some real obstacles to larger tenants migrating to this market, and the economic development efforts to attract them. The general lack of quality space is pushing rents higher for most properties, and the rental rate gap between existing product and new construction is beginning to close. Don’t look for major changes in either vacancy or rents within the foreseeable future, but a steady market demand and gradual increase in construction.
The bulk warehouse market rose from 4.5% vacant in 2013 to 8.2% in 2014. Some of this increase was due to the chaotic market created by the May 2013 tornados. Many tenants were displaced temporarily into previously vacant space and uncertainty about the future of the damaged buildings made true vacancy difficult to measure.
Flex space vacancy continued a multi-year market-wide absorption trend to report 9.3% vacant in 2014. This is the lowest flex vacancy since the year 2000. Fueling this is a tendency towards smaller spaces in reaction to the volatile economy nationwide.
Service Warehouse vacancy, until now the most volatile market, was 9.4 % vacant in 2014. Please keep in mind that Service Warehouse has the smallest total square footage of the three product types, and one sizable vacancy can skew the calculation.
There were seven sales of multi-tenant properties in the last twelve months:
Sale #1 – 1401-1421 and 1725 S. Fretz, four metal and masonry flex space buildings totaling 51,396 SF, built in 2002-2003, sold in June 2013 for $2,822,500 or $54.92 per square foot.
Sale #2, 3, & 4 – Mid-America Business Park. This multiple sale included three metal bulk warehouse buildings sold individually to the same investor over a period of six months as follows:
- 8001 Mid America Blvd., 130,673 SF built in 1999, sold 8/1/2013, $3,646,108 or $27.90/SF
- 8121 Mid America Blvd., 122,000 SF built in 1999, sold 8/1/2013 for $3,343,326.00 or $27.40/SF
- 8120 Mid America Blvd., 129,952 SF built in 2003, sold 1/1/2014 for $4,665,500.00 or $35.90/SF
Sale #5 – 5251 W. Reno, Oklahoma Warehouse Center West, 120,450 SF concrete tilt-up bulk warehouse space built in 1965, sold in October 2013 for $3,100,000.00 or $25.74 per square foot.
Sale #6 – 6601 S. Air depot, 144,000 SF concrete tilt-up bulk warehouse space built in 2008, sold in November 2013 for $7,600,000.00 or $52.78 per square foot.
Sale #7 – 401 E. Memorial, Northpoint Commerce Center, 58,400 SF concrete tilt-up bulk warehouse space built in 1996, sold in March 2014 for $3,30,000.00 or $56.51 per square foot.
2014 Forecast
Vacancy
Although significant new construction will begin in 2014, vacancy is forecast to continue to remain steady for the next 12 months.
Rental Rate
Rental rates will see modest increases, further narrowing the gap between existing-building and new-construction rates.
New Construction
Speculative development has begun and will accelerate as modern, functional space in the bulk warehouse sector is increasingly difficult to find.
View the 2014 Mid-Year Industrial Survey here.
