Austin Industrial Market's Fourth Quarter ReboundAustin Industrial Market's Fourth Quarter Reboundhttps://www.recenter.tamu.edu/news/newstalk-texas/?Item=103252015-02-24T10:49:00Z2015-02-24T00:00:00Z

AUSTIN (REOC Austin) – Area industrial leasing activity was docile through much of last year but rebounded in the fourth quarter, according to REOC Austin's fourth quarter 2014 industrial report.

New leases and expansions generated 548,474 sf of positive net absorption from October through December — more than the first three quarters combined. Those gains offset earlier losses to yield a total of 476,811 sf of positive net gain for the year, marking a fifth consecutive year of positive annual net absorption.

The market closed the year with a citywide vacancy rate of 10.9 percent, down from the previous quarter's 11.9 percent and relatively stable compared with 10.6 percent recorded in the same quarter last year.

"Over the course of the year, nearly 350,000 sf of new supply was delivered to the market, which offset positive absorption and kept vacancy flat," said Kim Gatley, REOC Austin senior vice president and director of research.

In terms of demand, the city’s 24.9 million sf of warehouse facilities outperformed the flex/R&D market in the fourth quarter nearly three to one. Warehouse properties had 364,623 sf of positive net absorption. For the year, area warehouse properties had a grand total of 948,052 sf of positive net absorption.

The warehouse market finished the fourth quarter with a citywide vacancy rate of 9 percent, down from 9.7 percent the previous quarter and 9.9 percent in the same quarter of 2013.

Citywide average quoted rental rates remained flat in the fourth quarter. The cost of renting office warehouse space ranged between $0.45 and $0.60 per sf per month while the price for bulk warehouse ranged between $0.40 and $0.55. Despite the increased vacancy within the flex market, asking rental rates for area flex properties are also on the rise and currently range between $0.75 and $1.05 per sf per month.

Looking ahead, steady demand for space is expected to continue to tighten vacancy, although the delivery of new supply may cause some fluctuations.

“Anticipated job growth resulting from company expansions and relocations will likely translate into continued demand for industrial space,” said Senior Vice President Jerry Heare.

Austin-Round Rock
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