Despite a year of pandemic-related and political uncertainty, the current OKC Multi-Tenant Industrial Market vacancy rate of 8.38 percent is down from 14.93 percent in 2020, the strongest single-year vacancy decline in the last 10 years. The rapid growth of ecommerce fueled by the pandemic is a significant driving force. We have been told by industrial companies trying to establish operations in the Oklahoma City market that low industrial vacancy and fewer vacant buildings for sale is not just a local phenomenon. Locally there has been a hiatus in speculative warehouse construction which is now being reversed with several active projects in the metro area. This is definitely a “landlord’s market” and, excepting major events in the national economy, the market shows no signs of changing in the foreseeable future.
Given its role in the supply chain, it is no surprise that bulk warehouse saw a substantial vacancy decline from 15.59 percent in 2020 to 8.17 percent in 2021, the lowest since 2013’s 4.5 percent. The north and southwest submarkets, which make up almost 84 percent of inventory, performed remarkably with the north 1.77 percent vacancy down from over 25 percent year prior and the southwest 6.45 percent down from 11.47 percent. The southeast submarket saw a slight increase in vacancy from 18.05 percent to 23.08 percent but represents only 16 percent of the overall market. With many national and international tenants occupying bulk warehouses and most being considered essential businesses, the pandemic and local oil and gas appears to have had little effect.
Flex spaces, which generally consist of tenants with less than 12,000 square feet, recorded a modest decline from 9.59 percent in 2020 to 6.47 percent in 2021. This is the fourth consecutive year of decline for this type of space, down from a high mark of 15.63 percent in 2018. The modest decline is a reflection of the type of tenants flex spaces typically house with many smaller and service-related businesses who were more susceptible to the pandemic and subsequent shutdowns.
Service warehouses, which include older spaces and those with moderate clear heights, also saw a significant reduction in availability with vacancy reaching a 7 year low of 9.96 percent. The southwest submarket led the way with a decrease from 21.92 percent percent vacancy to 11.79 percent. Because of the inclusion of older, larger facilities, this sector is always the most volatile since a few larger vacancies can skew the vacancy numbers. Sales of “investment grade” multi-tenant facilities in the last 12 months included three properties totaling 313,953 square feet, for a total of $19.6M with an average price per square foot of $62.42.