Norfolk Industrial Q4 2020 Marketview
Market Overview
>Norfolk’s vacancy rate sat at a record low of 1.6% to end Q4 2020, with only 1.3%of warehouse space and 4.9% of flex space vacant. This is the lowest vacancy the market has seen in the past decade, as the vacancy rate has been tightening since it reached a decade-high of 8.9% in 2012. It decreased 54 basis points (bps) quarter-over-quarter and 139 bps year-over-year. The market saw 421,045 square feet of positive net absorption during the quarter and a total of almost 1.7 million square feet of positive net absorption throughout 2020. There were a few large occupations during the quarter that helped contribute to this positive absorption, such as Reach International occupying 122,916 square feet of space at Commonwealth Storage Facility in Suffolk and Aclara Smart Grid Solutions, Eimskip Logistics, and Grand Brands LLC occupying 5816 Ward Court, leading to over 180,000 square feet of positive absorption in the Airport Industrial Park submarket.
>Average asking rents ended Q4 2020 at $5.58, an increase of $0.01 quarter-over-quarter and $0.70 year-over-year. Rents are the highest they have been over the last decade, with market rents averaging $4.92 over that period. Much of this can be attributed to a tight, owner-favorable market that lacks available quality space for buyers and tenants.
Key Events
>Following Amazon’s announcement earlier this year of building a fulfillment center and distribution center that will total almost 4.5 million square feet, Amazon announced it is going to occupy two delivery stations in 2021, creating more than 200 jobs. One location is 1400 Sewells Point Road in Norfolk Industrial Park. At this location, Amazon will be refitting a 165,000 square-foot warehouse into a new delivery station. The second delivery station will be located at a long-vacant Kmart on Mercury Boulevard of the Copeland/Lower Peninsula submarket. These events highlight that Amazon is willing to refit large box retail spaces as well as older industrial product, with location being a critical factor in their decision-making. These delivery stations, also known as last-mile distribution facilities, will load packages received from nearby Amazon fulfillment centers into vehicles for customer delivery.
>Manchester Capital Management purchased 1537 Air Rail Avenue from Lingerfelt Commonwealth Partners for $21,695,000, or $68 per square foot. This 320,000 square-foot building is adjacent to the Norfolk International Airport and Interstate 64 within the Airport Industrial Park submarket and is fully leased to third-party logistics (3PL) company World Distribution Services.
>Brisk contract activity is occurring at Greenbrier North condominiums. This planned development of eight 12,000 SF office warehouse condominiums has greatly exceeded expectations with five contracts and five individual units coming out of the ground at one time. This brisk activity at $120/SF is indicative of the underlying demand strength in the market.
>Norfolk’s vacancy rate sat at a record low of 1.6% to end Q4 2020, with only 1.3%of warehouse space and 4.9% of flex space vacant. This is the lowest vacancy the market has seen in the past decade, as the vacancy rate has been tightening since it reached a decade-high of 8.9% in 2012. It decreased 54 basis points (bps) quarter-over-quarter and 139 bps year-over-year. The market saw 421,045 square feet of positive net absorption during the quarter and a total of almost 1.7 million square feet of positive net absorption throughout 2020. There were a few large occupations during the quarter that helped contribute to this positive absorption, such as Reach International occupying 122,916 square feet of space at Commonwealth Storage Facility in Suffolk and Aclara Smart Grid Solutions, Eimskip Logistics, and Grand Brands LLC occupying 5816 Ward Court, leading to over 180,000 square feet of positive absorption in the Airport Industrial Park submarket.
>Average asking rents ended Q4 2020 at $5.58, an increase of $0.01 quarter-over-quarter and $0.70 year-over-year. Rents are the highest they have been over the last decade, with market rents averaging $4.92 over that period. Much of this can be attributed to a tight, owner-favorable market that lacks available quality space for buyers and tenants.
Key Events
>Following Amazon’s announcement earlier this year of building a fulfillment center and distribution center that will total almost 4.5 million square feet, Amazon announced it is going to occupy two delivery stations in 2021, creating more than 200 jobs. One location is 1400 Sewells Point Road in Norfolk Industrial Park. At this location, Amazon will be refitting a 165,000 square-foot warehouse into a new delivery station. The second delivery station will be located at a long-vacant Kmart on Mercury Boulevard of the Copeland/Lower Peninsula submarket. These events highlight that Amazon is willing to refit large box retail spaces as well as older industrial product, with location being a critical factor in their decision-making. These delivery stations, also known as last-mile distribution facilities, will load packages received from nearby Amazon fulfillment centers into vehicles for customer delivery.
>Manchester Capital Management purchased 1537 Air Rail Avenue from Lingerfelt Commonwealth Partners for $21,695,000, or $68 per square foot. This 320,000 square-foot building is adjacent to the Norfolk International Airport and Interstate 64 within the Airport Industrial Park submarket and is fully leased to third-party logistics (3PL) company World Distribution Services.
>Brisk contract activity is occurring at Greenbrier North condominiums. This planned development of eight 12,000 SF office warehouse condominiums has greatly exceeded expectations with five contracts and five individual units coming out of the ground at one time. This brisk activity at $120/SF is indicative of the underlying demand strength in the market.
