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Industrial Market Smacked With First Negative Absorption Since 1975

AUSTIN-The city's industrial market is in a tailspin as it registers 361,172 sf in the red. Vacancy overall is 20%, thanks to the delivery of another 1.8 million sf and citywide exits totaling 890,748 sf. Building thankfully has slowed.

By Tim Green | Updated on February 11, 2002

AUSTIN-Developers of industrial buildings didn’t hold back in doing their job in 2001. They added about 1.8 million sf to bring the Austin market to more than 31.2 million sf, 6% more than at the beginning of the year, according to the 2001 market review from NAI/Commercial Industrial Properties Co. And why not?

Absorption in the first half of 2001 was 529,576 sf. But from July through December, negative absorption took over with about 890,748 sf vacated, leaving the market with a year-end negative absorption of 361,172 sf. It was the first six-month or annual negative absorption recorded by NAI/CIP since it began tracking the industrial market in 1975.The results are not surprising: higher vacancy rates, lower rents and a dramatic drop in new construction. The industrial market is composed of research and development, flex, bulk warehouse, office-warehouse and manufacturing-warehouse buildings.

Cheryl Morse, NAI/CIP’s industrial specialist, tells GlobeSt.com that the travails of the industrial market seem to track those of the national economy. “There are less tenants in the market, and, of course, the ones that are there are slower to decide and they’re doing smaller deals,” she says. “And they are lesser-credit tenants. You don’t get the big national companies. They’re all holding off right now.”

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