MARKETBEAT
MARKETBEAT
Industrial
Richmond,Snapshot
VA 3Q 2016
Richmond, VAQ2 2018
Industrial
Economy
RICHMOND, VA INDUSTRIAL U.S. economic growth exceeded expectations during the second
Economic Indicators quarter, with activity rising at a solid rate and unemployment reaching
12-Month
Q2 17 Q2 18 historically low levels. The Federal Reserve Bank raised interest rates
Forecast
Richmond Employment 672.4k 682.1k
by a quarter of a percentage point and suggested two additional
increases will occur during the year, a rise from the previous quarter’s
Richmond Unemployment 3.9% 3.4%
projection. The rosy economic outlook also highlights an extremely tight
U.S. Unemployment 4.3% 3.8%
labor market with many industries experiencing a shortage of workers.
The U.S. followed through with trade tariffs on select Chinese goods
Numbers above are quarterly averages; May 2018 data used to represent Q2 2018
and China quickly responded with tariffs of their own. Further
Market Indicators (Overall, All Property Types) escalations could threaten demand for industrial space, but it will take
12-Month
Q2 17 Q2 18 considerable time to impact real estate. Economic expansion is
Forecast
Vacancy 5.1% 3.5% anticipated to continue in the second half of the year. Richmond’s
Net Absorption 573k -79k
economy maintained steady performance in the second quarter. The
unemployment rate decreased 50 basis points (bps) to 3.4% from the
Under Construction 474k 1.7M
previous year and remains below the U.S. rate of 3.8%. The metro area
Net Average Asking Rent $4.79 $5.16
added 9,700 jobs during the time period, with the service and
*Rental rates reflect net asking $psf/year
hospitality industries leading the way in job growth.
Net Absorption/Asking Rent
4-QTR TRAILING AVERAGE
Market Overview
Richmond’s industrial market continues to exhibit strong fundamentals.
1,000,000 $5.50
Vacancy rates in the metro area decreased 160 bps from the prior year
$5.00 to 3.5%. The average asking rent for industrial space also increased a
750,000
sizable 7.7% when compared to the previous year. Annual rent growth
$4.50 for the quarter was the third highest recorded since the economic
500,000
downturn. Limited supply, especially for smaller industrial space under
$4.00
100,000 square feet (sf), has fueled rising rents.
250,000
$3.50
Developers are responding with more than 1.7 million square feet (msf)
0 $3.00 of industrial space under construction. Several developments will
2013 2014 2015 2016 2017 2018
drastically change Richmond’s industrial landscape. Construction on
Net Absorption, SF Asking Rent, $ PSF Facebook’s 970,000 sf data center in White Oak Technology Park is
underway. Panattoni Development continues work on nearly 500,000 sf
of its I-95 Logistics Center, while Bissel Inc. announced plans for a 40-
Overall Vacancy
acre development site in the James River Industrial Center and
12.5% Hourigan Development revealed plans for the Deepwater Industrial
Park. With 800,000 sf of Class A space coming available in October,
10.0% 7000 Hardware Drive will be the largest available Class A distribution
center in the Mid-Atlantic.
7.5%
Five-Year Average = 7.4% Outlook
5.0%
The U.S. industrial market continues to benefit from the digital era.
Data centers provide an alternative use for space and retailers are
2.5%
expanding their logistics network to support the demands of modern
0.0% shoppers. New inventory will provide much needed, quality supply in
2013 2014 2015 2016 2017 2018 Richmond. Industrial landlords should expect rental rates to continue to
rise and vacancies to remain low in the second half of the year.
thalhimer.com
MARKETBEAT
Richmond, VA
Industrial Q2 2018
OVERALL OVERALL OVERALL OVERALL
OVERALL YTD NET
YTD LEASING AVAILABLE WEIGHTED AVG. WEIGHTED AVG. WEIGHTED AVG.
SUBMARKET TOTAL BLDGS INVENTORY * VACANCY OVERALL UNDER CNSTR
ACTIVITY VACANT NET RENT NET RENT NET RENT
RATE ABSORPTION
SPACE (SF) (MF)** (OS)** (W/D)**
Downtown 6 277,266 0 0 0.0% 0 0 N/A N/A N/A
Northeast 166 10,858,454 346,496 180,289 1.7% (79,885) 0 N/A $9.00 $4.25
Northwest 313 19,717,453 466,442 671,534 3.4% (52,266) 51,800 $5.39 $10.24 $5.60
Southeast 145 19,133,135 200,016 571,419 3.0% 26,473 1,015,647 $4.79 $7.55 $4.93
Southwest 413 42,775,805 848,609 1,779,757 4.2% (32,903) 681,700 $6.45 $7.20 $4.19
Richmond, VA Totals 1,043 92,762,113 1,861,563 3,202,999 3.5% (138,581) 1,749,147 $4.89 $9.49 $4.65
*Only includes buildings 20,000 SF and larger MF = Manufacturing OS = Office Service/Flex W/D = Warehouse/Distribution
**Real rates reflect asking $ psf/year
Key Lease Transactions Q2 2018
PROPERTY SF Tenant PROPERTY TYPE SUBMARKET
2600 Distribution Drive 202,560 Veritiv Warehouse Airport
1936-1962 Ruffin Mill Road 116,449 Max Finklestein Warehouse I-95 S/I295/Rt 10
1980-1998 Ruffin Mill Road 60,560 Keystone Automotive Industries Warehouse I-95 S/I295/Rt 10
Key Sales Transactions Q2 2018
PROPERTY SF SELLER / BUYER PROPERTY TYPE PRICE / $ PSF SUBMARKET
Enterchange at Walthall D 287,318 Exeter / Mapletree Investments Warehouse $26.1M / $91 I-95/I295/Rt 10
Warehouse /
1501-1507 Robin Hood Road 108,897 Dean Foods / Robin Hood Rd, LLC $5.5M / $51 Scott’s Addition
Redevelopment
Warehouse /
949 Myers St 51,508 Rebkee Partners / 947 Myers LLC $5.2M / $100 Scott’s Addition
Redevelopment
Warehouse /
3210 W. Marshall St 49,786 Jeff Johnstone / Dalian Development $3.8M / $77 Scott’s Addition
Redevelopment
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©2018 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered
from multiple sources believed to be reliable. The information may contain errors or omissions and is
presented without any warranty or representations as to its accuracy.
