For Texas Real Estate Business Magazine – May 2011 issue Lubbock, TX Industrial Market
The Lubbock industrial real estate market continues to be very stable due to a fairly healthy local economy.With unemployment at only 6% employers have slowly been expanding their businesses and their facilities.While there isn’t any speculative industrial construction ongoing, occupancy rates are at multi-year highs and there has been some owner occupied new construction over the past year.Occupancy rates are estimated to be in the high 80’s to low 90% range with most vacancies in older properties.A LoopNet search for industrial properties for lease only revealed one property over 50,000 sf available in the market.Industrial / warehouse space in the 5,000 to 25,000 sf range is readily available with lease rates for older properties with lower ceiling heights being in the $1.50 - $2.50 sf/yr nnn range.Newer buildings with better amenities are leasing at $3 - $4 sf/yr nnn.There are very few lease concessions available to tenants. There have been very few sales in the last year. Most of the new industrial construction over the past several years has been build to suits for owner occupants in the 1,100 acre City of Lubbock Industrial Park and Rail Park located along Interstate 27 north of town by the Lubbock International Airport.The park is operated by the Lubbock Economic Development Alliance who reports that their $20 million investment in land and infrastructure has created over $124 million in private investment.It has been a particularly attractive area for new businesses relocating to the area.Employers bringing new jobs to the city are able to get fully developed, ready to build industrial sites for free along with employee training benefits and property tax abatements on new plant and equipment.
With last year being one of the better cotton crops in recent years and with record high cotton prices the trickle down effect through the local economy has meant improving business for many sectors.The outlook is for steady, continued growth in the industrial sector and improving market lease rates
For Texas Real Estate Business Magazine – August 2010 issue Lubbock, TX Industrial Market
The good news for the Lubbock, TX industrial real estate market is that Lubbock’s primarily agricultural based economy is somewhat insulated from the problems of the national economy and the city remains healthier than most areas of the country.Unemployment is still running a little below 7% and industrial property occupancies are in the 80- 85% range with occupancy trending up, mostly from business expansions.The market is stable but there is not enough new demand to justify speculative development.Concerns about the national economy, national government, health care costs, and pending tax increases have most developers and property owners on the side lines.New construction has been limited to mostly owner – user properties and very few sales have been reported over the past year. Appraisers are having to go to larger Texas markets to find recent comparable sales. Most of the vacancy is in older functionally obsolete properties with lower ceiling heights or limited land area.Rents for existing industrial lease space (10% office and the balance metal building warehouse) are holding steady in the $2.75 to $3.25 sf / yr range on a NNN basis with older properties having to cover base year tax & insurance expenses to achieve those lease rates.Otherwise, tenant lease concessions are practically non-existent.
The one hot spot in the industrial market is the relatively new “Lubbock Business Park” and the “Lubbock Rail Port” which have been developed over the past four years by the Lubbock Economic Development Alliance (LEDA), the business attraction and retention arm of the City of Lubbock.The business park consists of 586 acres of land just off I- 27, south of the Lubbock International Airport and the Rail Port is situated on 526 acres of land just north of the airport on I-27. In the past three years LEDA has attracted a 225,000 sf O’Reilly Auto Parts distribution center, a 75,000 sf West Texas Packaging plant, a 112,000 sf distribution center for Standard Sales (Budweiser distributor), a new State of Texas Dept. of Public Safety regional office and forensics lab, a new 60,000 sf Monsanto plant and labs, a 30,000 sf Verizon Wireless data center and the Mexico based Molinos Anahuac (MACSA) 40,000 sf flour mill and labs.LEDA reportedly has two other big box users on the back burner that will take up the balance of the currently developed phase of the park.LEDA has invested approximately $20 million in land and infrastructure that in turn has stimulated $124 million in private investment in the park and rail port.For companies willing to commit to certain levels of new jobs created at certain salary ranges they are able to get free, fully developed, site ready land for their new facility and get work force training grants in some instances.It’s hard to compete with free but perhaps enough trickle- down demand from suppliers and service providers will increase private sector demand in the future.
All articles provided by Wes Hallmark/Owner Sperry Van Ness-Hallmark & Associates