If you are one of the many business operators in the local manufacturing or distribution industry that has experienced the business growth over the past couple years and are in need of additional space for your operations, you are not alone. The struggle now is find additional quality manufacturing or distribution properties for lease or for sale. With the local St Joseph County industrial vacancy near all time lows of 4.6% and Elkhart County vacancy below 1%, industrial space is nearly non-existent. The result is many companies are choosing to build new facilities either by adding on to existing or at a new location.
The shortage of industrial buildings has caused some developers to consider constructing speculative buildings in hopes that they will be able to quickly lease 80% of the construction. While it would seem this would be a natural reaction and happen out of pure supply and demand, the pace at which speculative building has happened has be relatively slow. The reason likely has to do with investors memories from 7-10 years ago and the great recession. Around 2010 industrial availabilities were plentiful as buildings sat vacant and on the market for months or even years. Today the overall national and local economy is still good, but there is much uncertainty in the economy due to a long sustained economic recovery, potential international trade tariffs, new tax structure and potential interest rate hikes. Another reason for the slow growth of spec building is construction costs. There has been tremendous construction activity in the past couple of years and costs of construction has increased significantly
If you are one of those business owners looking for expansion, there are still a few opportunities and lease rates for existing space have only crept up slightly while rates on new construction have risen more quickly.
The office of NAI Cressy Commercial Real Estate has the only complete database of all commercial properties in the region. Find out more by checking out our 2018 Annual Report or using our website to search properties.