(To read more on the industrial market, click here.)
NORTH LAS VEGAS-Harsch Investment Properties of Portland, OR is expanding Speedway Commerce Center, a flex-industrial park here that sits along Interstate 15. Speedway Commerce Center II will have 525,000 sf in eight tilt-up multi-tenant buildings ranging from 45,000 sf to 104,000 sf.Harsch acquired Speedway Commerce Center in 2001 for $44 million. The 1.4-million-sf, 27-building development is 99% leased to 200 tenants.
The 28-acre, 80-unit expansion--the land for which Harsch acquired last year--is slated for delivery in the first quarter of 2007. Las Vegas based TWC Construction is the general contractor.
Harsch's Vegas-based VP of operations John Ramous tells GlobeSt.com the expansion will be a higher-end product than the original Speedway, with between 15% and 20% of the spaces built out as office and clear heights between 24 feet and 30 feet. The existing center has closer to 5% office build out and lower clear heights.
In addition, Ramous says the spaces in the expansion will come to market fully finished in lieu of offering a tenant improvement allowance. Ramous says the strategy will save between 5% and 8% on construction costs and should result in the space being leased up more quickly.
"We find in this market that tenants want the immediate gratification," Ramous says. "Even if it's not exactly what they want, they would rather take that than necessarily wait."
Lease rates on the new space likely will start out in the middle $0.50s per sf per month on the warehouse component and around $1 per sf per month for the office space. If demand continues to outpace supply, rates likely will rise.
The industrial market reached a record low 2.9% valley vacancy rate in first quarter despite 1.4 million sf of new construction, according to Applied Analysis, a Las Vegas research and analysis firm.
In a good news scenario for Harsch, Applied Analysis principal Brian Gordon tells GlobeSt.com that while the market remains tight, he's seen some vacancy crop up in more mature buildings in more mature parts of town. "Tenants tend to be gravitating toward newer space while some of the older space that requires some level of retrofitting remains available," he says. "But overall, vacancies are tighter than they ever have been."
Moreover, Gordon says land prices are such that this may be the "final wave of development" in the industrial sector because there is a lack of industrial-zoned land at prices that are suitable for warehouse-type development. "The rents have not been able to keep pace with land and construction costs," he says. "When there are other competitive locations within the region, pricing is paramount for tenants and the cost side of the equation has become nearly out of reach with rents."
Continue Reading for Free
Register and gain access to:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
