The Hottest Industrial Submarkets
Vacancy is declining even with new industrial product being delivered, so we asked CBRE first VP Ace Schlameus and senior associate Josh Aguilar to give us the 411 on where the activity is hottest and why.
Southeast Austin
Ace (here, with his wife Alli and son Max) tells us demand is high in Southeast Austin because of the submarket’s proximity to the CBD, the airport, and Austin’s only true east-west corridor, Hwy 71. Warehouse NNN average direct asking rates ($/SF/month) have increased from $0.41 in Q4 2014 to $0.45 in Q1 2015. You can thank modern and more efficient infrastructure in new developments, e.g. higher ceilings, high r-value roofing, ESFR sprinkler systems, he tells us.
A good example is the new 174k SF Expo Business Park second phase. Developed in a JV of Trammell Crow Co and Clarion Partners, it's going for $0.55 to $0.65/SF NNN, Ace tells us. It's because a higher R-value roof is more energy efficient and tenants who need 100% climate-controlled space don’t need to apply additional insulation, stretching their tenant improvement dollars. Ace says Expo Business Park phase two has 28-foot clear height, which is approximately four feet higher than most product in the market. This feature, coupled with ESFR sprinklers, increases efficiency by allowing tenants to maximize storage space and stack product higher in a smaller footprint. (Sounds like a victory for Big Ladder.)
Northeast San Antonio
Josh (with daughter Taylor) tells us companies are relocating further out the northeast corridor along I-35. It helps them better serve the region by avoiding heavy truck traffic. The increase in rental rates can be attributed to new Class-A construction with higher clear heights (32’) and the increased size of concrete truck courts allowing for trailer parking or outside storage. The warehouse NNN average direct asking rates ($/SF/month) increased from $0.46 in Q4 2014 to $0.48 in Q1 2015.
Doerr Lane Industrial Park, under construction in Northeast San Antonio around Schertz, is a good example of demand. The 214k SF spec project is being developed in a JV of Conor Commerical Real Estate and Markaz. Rental rates are $4.74/SF per year NNN. It has a greater clear height of 32 feet, so tenants can take advantage of the cubic square footage, stack higher and be more efficient. Also, a larger than standard truck court allows tenants to stage more trailers and/or allow for outside storage. The new Class-A building will feature 32-foot clear height, 54 dock high doors, two ramp-served doors and 36 dedicated trailer parking positions. These Class-A features help tenants reduce their footprint without diminishing operations, Josh tells us.
