Vacancy within Lakeland's measured 6.7% through the third quarter, up a percentage point from a year ago yet lowest among Florida's largest industrial markets, and net absorption totaled 209,000 square feet, making Lakeland the only market in the state with positive absorption, according to Cushman & Wakefield of Florida. Average asking rents within the state distribution hub are $4.67 per square foot, among the state's cheapest, yet have fallen at least $1 over the past year.
No new industrial construction is under way in Lakeland, and isn't likely to add to its 26.4 million square feet of inventory for years to come. A continued lack of new and expansion leasing activity is a cause for concern as to whether the market will remain in positive territory through the rest of 2009, says Rian Smith, an industrial broker with C&W's Tampa office.
Most lease deals lately involve attempting to keep tenants in place, rather than seeing them shut down operations or move elsewhere, Smith says. Most deals are being done behind the scenes in the form of rent concessions.
"The current mantra is stabilization, not monetization," Smith tells GlobeSt.com. "It's easier to sharpen your pencil with an existing tenant and taking it on the chin for a while."
Demand for space has slowed along with the national economy, with only a handful of significant leases signed so far this year under 50,000 square feet, according to C&W. Smith says Lakeland benefited from pent-up demand during 2005 and 2006, while activity now is more like a trickle in comparison.
C&W states in its latest research report on the Lakeland industrial market that a rise in inward migration and employment growth is expected to happen as economic conditions strengthen, possibly in the next six to 12 months. While the brokerage does not expect market fundamentals to improve in the near future, they should become more stabilized over the next few quarters.
Industrial properties within the Lakeland market have changed hands with less frequency this year, according to a research report by CB Richard Ellis. Most sales involve warehouses ranging between 10,000 and 35,000 square feet, with pricing averaging $45 per square foot as cap rates continue to rise.
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