IRR-Richmond Mid-Year Viewpoint 2015 Local Market Report - Industrial
The Richmond industrial market continues its rebound with high absorption and strong leasing activity. Net absorption has totaled over 4.0 million SF since the beginning of 2012, and Lumber Liquidators and Medline Industries are scheduled to occupy nearly 1.5 million SF of new space in 2015. Quality Class A and B distribution and storage space is in short supply as vacancy has dipped below 8.0% and rental rates continue to fluctuate around $4.00/SF on average.
Reflecting the strong current market, capitalization rates have declined roughly 50 basis points during the year. While local brokers cite a high level of sales and leasing activity for all types of space, the recovery in the flex market has not been as robust. Vacancy remains around 12% for multi-tenant flex properties.
Another area of concern is the key I-95/Southside submarket where an oversupply of older Class B and C heavy manufacturing and bulk warehouse properties keep conditions softer than in the broader market. This should continue, as Philip Morris will be relocating additional warehousing operations within the submarket to 1 million SF of new space at Meadowville. In conclusion, we expect the general direction of the market to remain positive in 2015, but the horizon will likely see increases in interest rates taper and capitalization rates decline.
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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.