Industrial

Firm Expanding into 101K of Industrial Space

Video Product Distributors has leased 101,350-sq.-ft. of industrial space in Oklahoma City.
The Folsom, Calif.-based company will occupy space at 7501 SW 29th St. in the Will Rogers Business Park north of the Will Rogers World Airport, about one mile south of Reno Avenue off Council Road. The deal is for six years.
The company presently owns a 50,000 sq. ft. facility at 4801 South Council Road in OKC and leases space in two other buildings.
“This will be an expansion for them,” says Randy Lacey, an industrial broker with Grubb & Ellis/Levy Beffort who represented Video Product Distributors. “They were looking to buy but couldn’t find anything they liked.”
The building includes 24-foot ceilings and the quoted rent was $2.75 per sq. ft. Lacey says the tenant will seek to sell its existing property and make improvements in its new building, including adding an outdoor truck court, office buildout and extra parking for its 70 employees.

>>Ben Johnson l 4.27.10

Industrial Market Getting Softer

Two new reports on the state of the Oklahoma City industrial market offer at least one agreed interpretation about the future: there is softening ahead.

“We expect the overall vacancy rate to be close to 11.5% by year’s end,” says Bob Sullivan, CEO of NAI Sullivan Group. “We also believe rates will soften 5% to 10% as vacancies rise and landlords are willing to give concessions to attract tenants.”
According to the NAI Sullivan Group second quarter report, industrial vacancy rose to 10% from 9.3% in the first quarter of 2009 and up from 8.3% at the end of 2008.
A new report from Grubb & Ellis/Levy Beffort notes that while industrial vacancy increased in the second quarter, to 9.8%, the uptick itself was misleading. “The negative absorption this quarter can be attributed to one event. Producer’s Co-op, recently credited for taking one million square feet at the former Dayton Tire facility, just placed almost 750,000 square feet of its facility back on the market causing a increase in market vacancy of almost 100 basis points. Were it not for this event, vacancy would have decreased by 10 basis points.”
Both reports note that the industrial market in Oklahoma City remains stable to soft through the second quarter of 2009, as business owners take a wait-and-see approach to the economy.
NAI Sullivan Group pegs second quarter net absorption at -594,631 sq. ft. at the end of the first quarter and 8.3% at the end of 2008. Grubb & Ellis/Levy Beffort puts the absorption figure at -586,883 sq. ft.
In its forecast for the rest of 2009, Grubb & Ellis/Levy Beffort sees these trends:
– Many tenants will seek one-year lease extensions in lieu of three or five-year lease
renewals.
– Look for rents to decrease slightly through the end of 2009 as property owners try to
spur activity in the industrial market.
– Expect vacancy to increase as natural gas/oil services tenants with expiring leases
downsize as well as other users.
>>Ben Johnson l 8.07.09

Shearer Renews with RREEF

According to CoStar Group, Shearer Supply Inc., a wholesale HVAC distributor, has renewed its 16,710-square-foot lease with RREEF at 4228 Charter Ave. in Oklahoma City. The 56,275-square-foot warehouse is part of the Metropolitan Industrial Park, in the Southwest Industrial submarket. David Portman with CB Richard Ellis/Oklahoma brokered the deal.
>>Ben Johnson l 6.10.09

OKC Industrial “Hanging On”

According to the latest analysis by Grubb & Ellis/Levy Beffort, the Oklahoma City industrial market appears to be in absolute, well, limbo.
“Oklahoma City’s industrial property owners and tenants were able to handle the economic downturn for the first quarter of 2009,” opines the report. “There was little activity in Oklahoma City on the part of either. The market appears to be in a state of suspended animation.”
I recently sat down with the firm’s industrial specialist, Randy Lacey, to get his take on the lay of the industrial land.
Q: Where do you see the OKC industrial market right now?
The industrial market really hasn’t changed a whole lot, it’s always been a conservative, stable environment. The market is driven a lot by users. There are a lot of users in our market and not a lot of speculative development, there has never been a lot of it. So we’re never really overbuilt and we don’t go through these big swings that they do sometimes in other markets when people get all excited and start building sites.
Q: Is it mostly a local ownership base?
The ownership of industrial real estate really hasn’t changed too much. 70% of the buildings are owner-occupied so these are companies that are rooted here in the state and to a large extent have grown up and gotten bigger and bigger. CalPERS bought the Trammell Crow portfolio in the early-90s and they sold it a year or so ago to RREEF.
So large chunks of industrial space have been in solid hands with not a lot of change and turnover. We don’t have big swings in terms of rental rates, either. There are buildings that are older that rent for less and there are buildings that are newer that rent for more. There are certain companies that want quality and don’t mind paying the price and there are certain companies that don’t need the fancy stuff like taller ceilings or as much parking or bigger truck courts.
There seems to be a market for all of the different kinds of space we have.
Q: As companies like Amazon and others have looked at their supply chains and where to locate their distribution centers, has Oklahoma City been more on their radar because of its geographic location versus say Dallas?
Dallas is so much different than our market. It’s definitely a regional hub but I think Oklahoma City has become a little bit more favorably seen. I see us as an emerging city, a city that’s on the move and could foster some very good development and good announcements about people that are looking at our market. We just have a lot going on. There are a lot of changes that are happening and it excites people and it creates an imagination in people’s minds as to what could be, what the possibilities are in the future and that’s the reason we’ll be more known and a better commodity.
It’s also fairly flat here. There is a lot of land and there aren’t a lot of encumbrances. Oklahoma City is one of the largest cities in terms of square miles. Thanks to our founding fathers,. Interestingly enough, though, when you look at developed land with utilities and zoning, it does narrow down quite a bit. People are confused when they come here looking for land because it’s everywhere, but development has been slow, the development of utilities is pretty much on the developers. It’s not that way in every market but it is that way here. So we’ve expanded slowly.
>>Ben Johnson l 6.09.09