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4Q 2011 | INDUSTRIAL

NASHVILLE

MARKET REPORT

Market On the Right Track; 2012 Forecast Is Positive The end of 2011 brought a small sigh of relief in the commercial real estate industry. After a couple of rough years, this past year brought glimmers of hope as the market began to improve. The market’s momentum picked up and by the end of the year, absorption posted a positive 1,477,068 square feet. This is a drastic turnaround from the negative 1,450,477 square feet absorption at the end of 2010.

Updated 7-2011

MARKET INDICATORS 4Q

2012

2011

Forcast

VACANCY NET ABSORPTION CONSTRUCTION

In addition to positive absorption, vacancy rates have started to drop, falling 90 base points from 2010’s fourth quarter to 2011’s fourth quarter. Contributing to this were several large transactions that were inked this year. This includes LKQ Corporations’ 105,600 square foot lease in the Southeast submarket and Sky High Sports’ 51,960 square foot lease in the Southeast submarket. Quarterly Comparisons and Totals

-

QUARTER

BUILDINGS

TOTAL

DIRECT

INVENTORY SF

VACANT

DIRECT

SUBLEASE

NET

NET

UNDER

AVG

VACANCY

VACANCY

ABSORPTION

ABSORPTION

CONSTRUCTION

ASKING

RATE

RATE

CURRENT QTR

YTD SF

SF

RATE

Q4.11

1,940

158,955,449

17,928,840

11.3%

1.4%

462,046

1,477,068

1,624,000

$4.24

Q3.11

1,944

159,219,825

18,368,566

11.5%

1.4%

811,107

774,327

3,124,000

$4.51

Q2.11

1,944

159,138,430

19,577,486

12.3%

1.4%

(115,610)

(111,324)

589,000

$5.44

Q1.11

1,946

158,970,444

19,153,453

12.3%

1.6%

479,828

479,828

2,032,000

$4.27

Q4.10

1,950

158,292,862

19,349,141

12.2%

1.7%

(478,523)

(1,450,577)

2,032,000

$4.18

RENTAL RATE

Nashville Industrial Market

Summary of Statistics, Q4 2011 Vacancy Rate: 11.3% Absorption: 462,046 SF Under Construction: 1,624,000 SF Asking Rents Per Square Feet: Overall Rental Rates: $4.24 Warehouse - Distribution: $3.91 Light Industrial: $3.07 Heavy - Mfg: $3.00 Bulk Warehouse: $3.12 Flex/R&D: $7.49

www.ColliersNashville.com

By Property Type TOTAL BUILDING TYPE

BUILDINGS

INVENTORY SF

DIRECT VACANT

DIRECT

SUBLEASE

NET

NET

AVG

VACANCY

VACANCY

ABSORPTION

ABSORPTION

ASKING

RATE

RATE

CURRENT QTR

YTD SF

RATE

Warehouse - Distribution

1,050

49,032,051

5,373,094

11.0%

0.72%

245,937

62,642

$3.91

Light Industrial

560

58,188,985

2,661,192

4.6%

0.56%

122,730

(61,781)

$3.07

Heavy - Mfg

7

855,347

0

0.0%

0.0%

0

0

$3.00

Bulk Warehouse

98

38,774,808

8,062,905

20.8%

3.6%

15,600

1,521,025

$3.12

Flex/R&D

225

12,104,258

1,831,649

15.1%

1.26%

77,779

(44,818)

$7.49


MARKET REPORT | Q4 2011 | INDUSTRIAL | NASHVILLE

New and current construction projects have also added to the momentum. Late in 2011, Amazon.com announced that it would build two fulfillment centers in Middle Tennessee with a ground breaking scheduled in the beginning on 2012. In addition to this, the area has several multi-year projects like the Nissan Battery Plant and the Hemlock Semiconductor Plant that are still under construction. This indicates a confidence in the area and its ability to host new businesses. Most importantly, these new projects will bring thousands of jobs to the Middle Tennessee region, reenforcing the trend of momentum.

DEFINITIONS Absorption - The net change in occupied space between the current quarter and the previous quarter, calculated by summing all the positive changes in occupancy and subtracting all the negative changes in occupancy. Available SF - Space currently being marketed for lease or sublease. Total Building SF - All single & multi tenant office buildings above 20,000 SF excluding medical, government and owner occupied.

The forecast for 2012 is positive, with several deals already in the works. We believe that vacancy rates will continue to drop, absorption will stay positive and asking rates will stabilize. A few points to focus on are the impacts of the upcoming presidential election, lowering unemployment rates and Nashville’s ability to continue to bring new business to the area.

Vacancy Rate - Percentage rate of the total amount of physically vacant space divided by the total amount of existing inventory.

2Q 2011 | Net Absorption By Submarket

2Q 2011 | Vacancy Space By Type

400000 350000

50000

IBD

100000

North

Flex/R&D

150000

West

Bulk Warehouse

200000

Southwest

Heavy - Mfg

250000

Southeast

Light Industrial

300000

East

Warehouse - Distribution

0 -50000 -100000

RECENT SALES TRANSACTIONS SALES ACTIVITY PROPERTY

BUYER

SALE PRICE

SIZE SF

SUBMARKET

Southpark & Centrepoint Portfolio

Crow Holdings

$56,700,000

1,778,400

Southeast

Commerce Farms 3

PanCal

$9,583,600

456,500

East

1901 Columbia Avenue

City of Franklin

$2,300,000

40,458

Southeast

RECENT LEASING TRANSACTIONS LEASING ACTIVITY PROPERTY ADDRESS

TENANT

SIZE SF

TYPE

SUBMARKET

501 Mason Road

LKQ Corporation

105,600

New

Southeast

2140 Dayton Avenue

FSi, Inc.

91,000

Renewal

IBD

1260 Heil Quaker Blvd

Singer Sewing Company

87,450

New

Southeast

Airpark Business Center XI

Sky High Sports

51,960

New

Southeast

1253 Heil Quaker Blvd

Austin Foam Products

40,800

Expansion

Southeast

Elm Hill Industrial Center 4

Wilson Art

35,712

New

East

*Bold text denotes Colliers International transaction.

P. 2

| COLLIERS INTERNATIONAL


MARKET REPORT | Q4 2011 | INDUSTRIAL | NASHVILLE

UPDATE

Market Comparisons

INDUSTRIAL MARKET

BLDGS

TOTAL INVENTORY SF

DIRECT VACANT SF

DIRECT VACANCY RATE

DIRECT VACANCY RATE PRIOR QTR

SUBLEASE VACANCY RATE

NET ABSORPTION CURRENT QTR SF

NET ABSORPTION YTD SF

AVG ASKING RATE

305

26,259,908

4,714,769

18.0%

17.9%

0.6%

18,911

366,099

$3.94

Bulk Warehouses

29

12,852,289

3,776,605

29.4%

29.4%

0.0%

0

639,120

$3.09

Flex/R&D

42

1,846,181

311,371

16.9%

15.2%

0.01%

(46,801)

(114,454)

$7.75

SUBMARKET

EAST

Heavy - Mfg

1

76,058

0

0.0%

-

0.0%

0

0

-

Light Industrial

87

5,277,623

82,000

1.6%

1.5%

0.0%

0

(62,000)

$3.66

Warehouse - Distribution

146

6,207,757

544,793

8.8%

9.2%

2.3%

65,712

(96,567)

$4.02

NORTH

450

39,866,721

3,081,188

7.7%

7.5%

2.0%

(97,301)

248,417

$3.55

Bulk Warehouses

19

6,995,658

728,000

10.4%

9.5%

6.2%

(90,000)

(43,000)

$3.13

Flex/R&D

40

1,580,142

238,188

15.1%

26.9%

0.0%

(5,300)

(7,214)

$6.54

1

314,125

0

0.0%

0.0%

0.0%

0

0

$3.00

Light Industrial

140

17,073,026

404,725

2.4%

2.6%

1.3%

47,214

75,721

$2.63

Warehouse - Distribution

250

13,903,770

1,710,275

12.3%

11.9%

1.1%

(49,215)

222,910

$3.15

SOUTHEAST

419

50,677,119

6,881,099

13.6%

15.2%

2.1%

359,467

916,796

$4.20

Bulk Warehouses

44

17,302,331

3,530,300

20.4%

22.2%

5.6%

105,600

952,905

$3.09

Flex/R&D

79

4,355,439

818,134

18.8%

26.9%

0.6%

121,974

27,348

$7.39

Heavy - Mfg

3

149,990

0

0.0%

0.0%

0.0%

0

0

-

Light Industrial

103

17,245,482

926,890

5.4%

5.3%

0.1%

0

(4,350)

$3.40

Warehouse - Distribution

190

11,623,877

1,605,775

13.8%

15.3%

0.4%

131,893

(59,107)

$4.22

SOUTHWEST

Heavy - Mfg

235

13,617,374

774,981

5.7%

6.5%

0.8%

91,540

134,758

$6.43

Bulk Warehouses

4

918,130

28,000

3.0%

3.0%

0.0%

0

(28,000)

$4.50

Flex/R&D

42

3,389,764

314,182

9.3%

9.9%

0.5%

10,273

52,625

$8.12

Heavy - Mfg

1

100,000

0

0.0%

0.0%

0.0%

0

0

-

Light Industrial

58

3,383,217

66,414

2.0%

4.5%

2.4%

86,320

86,320

-

Warehouse - Distribution

130

5,826,263

366,385

6.3%

6.2%

0.1%

(5,053)

23,813

$4.84

WEST

125

10,581,561

796,887

7.5%

7.4%

0.0%

(16,900)

(163,177)

$3.23

1

500,000

0

0.0%

0.0%

0.0%

0

-

-

Light Industrial

53

7,480,503

725,459

9.7%

9.5%

0.0%

(16,900)

(176,835)

$3.18

Warehouse - Distribution

71

2,601,058

71,428

2.7%

2.7%

0.0%

0

13,658

$3.48

406

17,952,766

1,679,916

9.4%

7.0%

0.6%

106,329

(25,825)

$4.42

1

206,400

0

0.0%

0.0%

0.0%

0

0

-

22

932,732

149,774

16.1%

14.7%

10.9%

(2,367)

(3,123)

$7.19

Bulk Warehouses

IBD Bulk Warehouses Flex/R&D Heavy - Mfg Light Industrial Warehouse - Distribution GRAND TOTAL

1

215,174

0

0.0%

0.0%

0.0%

0

0

-

119

7,729,134

455,704

5.9%

1.9%

0.0%

6,096

19,363

$3.05

263

8,869,326

1,074,438

12.1%

10.9%

0.0%

102,600

(42,065)

$3.75

1,940

158,955,449

17,928,840

11.3%

11.5%

1.4%

462,046

1,477,068

$4.24

COLLIERS INTERNATIONAL |

P. 3


MARKET REPORT | Q4 2011 | INDUSTRIAL | NASHVILLE

512 offices in 61 countries on 6 continents

NORTH Gallatin Rd.

132

Bu

en a

12

Vi ba no n

Pl .

a st Le

EAST

tE nd

ding Pl.

es

Ha r

IBD dmo nt B lv d .

Mu rfr e

es bo ro Rd .

Moores Ln .

Fra nkl in

SOUTHWEST

lvd.

Be l

Hickor yB

lR d.

.

O ld

le Rd

W

y ile . B r k wy P

nsvil Nole

Av e.

W oo

Donelson Pike

WEST

• $1.5 billion in annual revenue • 979 million square feet under management • 12,500 professionals

96

SOUTHEAST

UNITED STATES: Nashville Nate Greene Managing Partner 300 Broadway Nashville, TN, 37201 TEL +1 615 850 2729 FAX +1 615 850 3229

Figure 1: Nashville Industrial Submarkets include North, East, Southest, Southwest, West and IBD.

MARKETING DIRECTOR

Nate Greene, CCIM DIR +1 615 850 2729 Managing Partner

Tom Davis, SIOR DIR +1 615 850 2730 Partner

Terry Smith, CCIM SIOR DIR +1 615 850 2724 Partner

Nashville Allison Schepman 300 Broadway Nashville, TN, 37201 TEL +1 615 850 2748 FAX +1 615 244 2957

Copyright © Colliers International The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it.

Bill Buckley DIR +1 615 850 2705 Affiliate Broker

Jerry Miele DIR +1 615 850 2735 Affiliate Broker

Max Smith DIR +1 615 850 2722 Affiliate Broker

ABOUT COLLIERS INTERNATIONAL – NASHVILLE Collier International Nashville is one of the largest full service commercial real estate firms in the region. Its brokers provide a myriad of services to owners and tenants with a commitment to excellence that has won them the respect of local, national and international clients for many years. With more than 25 employees, the firm serves clients ranging from Fortune 500 corporations, major banks and insurance companies to investors, private institutions and small businesses.

www.ColliersNashville.com

Accelerating success.

4Q 2011 Nashville Industrial  

This report details the industrial market in Nashville for the fourth quarter.

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