Stability is the ideal word to describe industrial vacancies when looking at both the Green Bay and Appleton markets, says Tom Scheurerman, managing broker for Grubb & Ellis | Pfefferle in Appleton in sharing the most recent Industrial Trends Market Report.
Overall in the Appleton market, industrial vacancies declined in the first half of 2010 from 11.1 percent to 10.8 percent. During the last six months, area businesses absorbed a net of approximately 145,000 square feet of industrial space. Several new smaller properties under 50,000 square feet came on the market, including the former UBC Building Supply facility on West College Avenue, adding 40,000 square feet of available space to the west market area.
Major leases were signed for facilities on Perkins Street and in Menasha totaling 110,000 square feet, which was the primary cause of the slight decline in vacancies in the area.
Small properties continue to come on the market, but as overall leasing activity remains steady, the vacancy rate has dropped 100 basis points over the last 12 months. As the nation moves out of the recession, the local real estate market – although not vibrant – is steady and not trending negatively, Scheuerman says.
The area has avoided vacancies in significantly larger industrial buildings in the last year. In fact, lessors seeking spaces in excess of 150,000 to 200,000 square feet have very limited choices.
Along with stability in the market has come stability in pricing, as rental rates have remained level.
“The requirements are definitely for more smaller spaces and the sheer volume of requests is lower,” Scheuerman says.
In the Green Bay market, industrial vacancies rose slightly to 5.1 percent from 4.4 percent six months ago (a change of 70 basis points), which is still lower than state and national averages, Scheuerman says.
The lower vacancy levels are reflective of the area and the nature of the marketplace, which is comprised of a majority of owner-occupied space rather than leased space. Vacancy rates in the Green Bay area have not fluctuated more than 200 basis points for the last 36 to 42 months.
In reviewing the activity of the last six months, no major lease transactions of significant size occurred. One larger facility did come on the market – the former Hudson-Sharp building on Lombardi Avenue added 62,000 square feet to the market for lease.
Green Bay’s east side experienced a slightly higher vacancy rate of 6.5 percent compared to the west side with 4.8 percent. As with the Fox Cities market, the activity is not vibrant, but leasing activity is occurring on a smaller basis, Scheuerman says.
As the nation emerges from the recession, it is expected the Green Bay market will strengthen in terms of activity and demand over the next several years. Although there is ample space for smaller requirements at the present time, there is a shortage of larger facilities, especially in the 150,000-square-foot and higher range.
The relative stability of the market has also provided stability in pricing, as rental rates have remained level.