Industrial Absorption Up 76% This Quarter
Portland’s Q2 industrial vacancy rate was "the lowest rate ever experienced" by Colliers International’s most experienced advisers, the firm reports. At 4.3%, the rate has been steadily decreasing.
Industrial absorption was at nearly 700k SF in Q2, a whopping 76% higher than Q1, which was 245k SF, according to Colliers’ report.
Half of Portland’s industrial construction pipeline, tallying 4M SF of proposed or under-construction projects, is already spoken for. Colliers reports around 2M SF is confirmed leased or build-to-suit. That 2M SF equates to 1.12% of the market’s existing inventory. Colliers mentioned PDX Logistics Center’s Phase 2 (below), the poster child for heightened pre-leasing activity, where all 355k SF was under contract before delivery.
The industrial market’s booming growth is attributed to Portland’s increasing population and growing economy and the resulting demand for logistics and manufacturing space. Colliers noted the comparably attractive returns industrial investment can provide—2016’s second quarter brought $222M of transaction activity. Transactions included the sale of the Photomask building (below) after it sat vacant for nearly two decades.
Lease rates are up this quarter as well. Average asking rents hit $0.52/SF each month, a figure that has grown 10% since this time last year. Besides PDX Logistics Center, some big leases last quarter included Wymore Transfer Co’s 175k SF lease at Chirgwin Distribution Center and Kelley Point Distribution Center’s lease to Bay Valley Foods, which took 150k SF.
