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LAS VEGAS-Harsch Investment Properties of Portland, OR, recently retained local broker Dean Wilmore and his team members to fill vacancies or maintain occupancy at three of its area properties. Wilmore tells GlobeSt.com that Harsch previously marketed the properties in-house.

The three properties total approximately 565,250 square feet. The total includes Green Valley Business Center, which has 291,953 square feet, the Eastern Commerce Center with 162,434 square feet and Patrick Airport Business Center with 110,853 square feet.

Wilmore tells GlobeSt.com that Green Valley has the most vacancy, with about half the space available. The other properties are well leased but have several leases set to expire in 2009. When asked about the strategy for leasing the space amid rising vacancies, Wilmore says, “We’re going to be extremely competitive.”

“Tenants of all types are downsizing; we’re seeing a flight from big space to small space,” he says. “The best occupied industrial in the city are buildings offering units from 2,000 square feet to 5,000 square feet.”

The 101.1-million-square-foot industrial market here posted a third quarter vacancy rate of 8.7%, up 50 basis points from mid-year, according to Applied Analysis, a locally based business research and advisory firm. The increase in vacancy was due to 1.1 million square feet of new product versus approximately 500,000 square feet of new demand.

Vacancy is up from a record low of 3.3% in late 2005. This time last year, vacancy was 6.1%. With an additional 1.6 million square feet now under construction and demand dipping due to the economy, the vacancy rate is expected to rise during the fourth quarter but not substantially.

“We continue to witness vacancy escalations across all sectors, and in most instances reaching new heights,” says Applied Analysis principal Jeremy Aguero. “While the industrial segment has witnessed a doubling of vacancies during the past several years, they remain within a stone’s throw from the sector’s historical average (7.7%). This consideration, combined with the lowest levels of new construction in five years, suggests runaway vacancies within the sector are unlikely.”

Manufacturing space posted the lowest vacancy rate at 7.3%. Flex space posted the highest vacancy rate at 13.3%, according to the report. The average asking lease rates across all sectors is up approximately 4% from last year. The average asking rate for manufacturing space is $0.84 per square foot while the average for distribution space is $0.65 per square foot and, for flex space, $1.03 per square foot.

“Pricing will be a key factor for those with the ability to expand or relocate,” Aguero says. “Well-capitalized firms with aggressive business models and liquidity in this opportunistic environment will have potential users leveraging the economy and negotiating deals while fundamentals remain soft. Adjustments in pricing and land values may be required as the depth and breadth of the current downturn are uncertain at best. Under any scenario, patience will be required.”

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