According to Xceligent’s fourth-quarter market trends report – which monitors commercial activity in Springfield and six bedroom communities – the industrial vacancy rate was 4.3 percent, down from 5 percent in 2013. Why does it continue to improve? No new construction. As the economies improve, people need space. There wasn’t a lot of fallout with the recession, as far as foreclosures in the industrial sector as much as others. It was one of the areas that recovered quicker. Commercial real estate follows housing. We are a consumer society – nothing happens unless houses are being purchased. Commercial development follows rooftops.
The industrial market vacancy rate went from 5.03 to 4.3 [percent], a drop of 14.5 percent and asking rates went up 30 cents a square foot in fourth-quarter 2014, from 2013. The retail market was inverse. It was 4.6 [percent] and the vacancy went to 5.12 [percent]. It increased 11 percent and the asking rates dropped. As there is more supply, the rates go down.
The Springfield Business Development Corp. has been vocal in the need for more industrial space, saying inventory is too low. Are you seeing that demand? Yes, I have had clients looking for space, and we couldn’t find it in the industrial market. Interestingly enough, the two properties that have been counted as speculative space coming on line is the one Tom Rankin is doing at the business park at Kearney [Street] and [U.S. Highway] 65 and Eric Roberts’ out by the airport. I think Rankin’s is 60,000 square feet, and Eric’s is about 30,000 square feet. I don’t think either one has secured a tenant, yet. Last time I heard, they were both talking to several.
What are your clients looking for? Most of what I’m seeing is, what I call, service center business. It’s office warehouse, basically. It’s not true distribution space; it’s more maybe the building trades, HVAC people and things like that. Convenience and visibility are important. They need a dock, a little bit of office or retail feel upfront. I haven’t seen any true manufacturing space. That’s fairly rare. Probably the Red Monkey [Foods] space is the best example. We don’t have a lot of true distribution space.
Can Springfield draw in more manufacturers? Yes, Springfield has a lot to offer. The workforce is good. The transportation is good. The cost of living is low. It’s definitely possible; it’s just hard to find. Manufacturers are very scarce, and everyone is competing for them. You have to be sophisticated enough in your economic development process to attract people. If you can pick up and move a manufacturing process, you can probably go anywhere. People like Red Monkey would want to stay close, because that’s where the principals live, but what is stopping them form going to Columbia, Joplin or Nashville? Once you pick up and decide to move, it’s not that much harder to go somewhere else.
Where will the industrial market grow next? There is room for more in the two industrial complexes, but those parks are starting to fill up. There is plenty of ground elsewhere. that is the main thing. In particular, the next area I see is the Republic area. [Economic Development Director] Gail Noggle has done a good job out there and attracted a lot of tenants. The ground is cheap, utilities are there [and] the workforce is there. We will continue to see more deals happen out that way. They have had more activity than anyone else, but they sat on it for quite awhile. There was a lot of cost to build that with streets and utilities and such. The timing wasn’t good.
The local industrial vacancy rate is less than half the national rate. Why the gap? Other markets have responded quicker, we are pretty slow in general. Most would tell you a 5 percent vacancy rate is pretty tight. That’s a buyer’s market at that point. A healthier number is closer to 10 percent. Nationally, we are doing good.[[In-content Ad]]
Springfield event venue Belamour LLC gained new ownership; The Wok on West Bypass opened; and Hawk Barber & Shop closed on a business purchase that expanded its footprint to Ozark.
