IRR-Hartford Mid-Year Viewpoint 2015 Local Market Report - Industrial
Leasing activity in the Central Connecticut industrial market improved in 2014, with over two million square feet leased in Central Connecticut industrial market. Most notable, perhaps, was the significant increase in occupier activity from the previous year. After finishing 2013 with only 1.4 msf of new leases signed and 400,000 sf sold to end users, 2014 saw the numbers bounce back to 2.1 million square feet in each category. This puts leasing activity back on par with 2011 and 2012. For user sales, however, the story is even more encouraging: 2014 saw the most square footage sold to end-users in over ten years. After fifteen consecutive years of job losses in the Connecticut Manufacturing sector, the market may have turned a corner. Rental rates across the industrial market increased slightly, from $4.45 per square foot at year end 2013 to $4.55 at the end of 2014.
Despite the improvement in leasing activity, vacancy rates increased slightly from 13% at year-end 2013, to 13.5% at year-end 2014. While 2014 finished on a positive note, it remains too soon to tell if this is the beginning of a broader upturn, or simply a stabilizing after years of decline. 2014’s numbers compare favorably to the recent post-recession years, but are still significantly down from their pre-recession averages. For the time being, it is likely that prospective tenants will still be able to find deals on quality space as landlords look for ways to entice them.
The Manufacturing sector, which posted a 15-year loss of more than 78,000 jobs, is expected to add 2,200 new jobs over the next three years. Another driver of demand for industrial product, the Trade, Transportation, and Utilities sector, is expected to realize a net gain of 10,500 new jobs over the same period.
We expect the worst is over and slow, organic improvement of economic conditions across the state, coupled with limited new supply, should in turn breathe new life into the industrial real estate market.
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IRR Mid-Year Viewpoint 2015 comprises a National Overview report and 300+ two-page Local Market Reports for all key property types as well as additional resources, including metrics methodology, graphs, and tables; these free reports may be downloaded from IRR’s site here.