Joel Hutak and Phillip DeRousse of the Lee-Orange office have served the Mid County Industrial Buildings Market for over 10 years now and are seeing a trend of a two-tiered system emerging in that region. New construction is at a stand still due to the mature nature of the market (approaching full build-out) and new builds are generally larger facilities to address the e-commerce sector and container traffic for imports. Existing industrial areas are being re-purposed for “higher uses” aka multi-family residences, retail or office development.

With the fore mention market conditions Hutak and DeRousse have seen an increase in pricing for some time now but have also noticed a pricing split in the market between class A and class B Industrial Buildings. In their article they explain the vagaries in these building classifications but have noticed some tendencies of buyers that are willing to pay up to 15% over market to secure a class A building. Class B usually is an older building without key amenities including Dock High Loading, Fenced Yard, and appropriate Power to address users needs. Since class A buildings are yielding higher efficiency for users and supply is short prices are expected to continue to rise. Unfortunately, Class B-C (second tier) is much bigger than the first. They were once the Class A buildings of its time but now are our functionally obsolete problem.

Industrial business owners in need of space are heading into a stiff headwind these days. Vacancies have fallen to record lows and lease rates and sales prices have soared to all-time highs. “This bifurcated market is likely to continue. So, we think it’s a good idea to always be on the lookout for the building that truly fits your needs. That’s what we are here to help you with. So, please keep us in mind.”

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