Lyle N. Nelsen, a corporate industrial specialist at Rebman, calls the growing number of condominium sales in the industrial market "an interesting phenomenon." Nelsen attributes the condo sales to low interest rates.
In the overall 7.1-million-sf service center market, however, net absorption for the year was 364,251 sf, less than Nelsen's projected absorption of 500,000 sf. He remains confident, however, the 500,000-sf absorption level will be reached in 2005.
Fourth-quarter absorption totaled 148,333 sf, the best performing period of the year. Absorption in the first quarter was 124,907 sf; 23,517 sf in the second quarter; and 67,494 sf in the third quarter.
A bright spot in the service center market was the improved vacancy level. "We began the year with a 13.19% vacancy and ended at 11.98%," Nelsen says. "The 11.98% level is even more significant when you consider we added 206,665 sf of new space, plus the loss of 70,000 sf" when Starwood Vocational moved from the Lakefront Center. The Rebman survey shows there is 852,148 sf of flex space available
Nelsen says "the big challenge in 2005 is the absorption of 307,524 sf of new space under construction that will come on line this year." He adds, "Other challenges will be success in retaining renewals, holding rates steady and avoiding concessions as much as possible."
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