Monday, June 13, 2011

Flight to Quality in Industrial Spaces

Our market is currently experiencing a 'Flight to Quality'. Class A product is getting most of the attention while the Class B and C product await interest. We are seeing existing tenants taking advantage of low rental rates to upgrade their building, as well as new tenants to our market focus on these same Class A buildings.
Over the past few years, deals completed greater the 50,000sf have landed as follows:
2008 – 22 deals completed, 14 went to Class A (63.6%)
2009 – 18 deals completed, 13 went to Class A (72.2%)
2010 – 14 deals completed, 10 went to Class A (71.4%)
2011 YTD – 10 deals competed, 6 went to Class A (60.0%)
If activity stays up, the Class A inventory could tighten quickly, which will bring hope to Class B and C buildings.

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