LEXINGTON, KY—The city of Lexington may be best known for the world-famous horse farms that surround it, but the mid-sized Kentucky city also hosts the University of Kentucky and become a technology and research hub, as well as an important government center. And the first half of 2013 saw some positive momentum in several of its commercial real estate sectors, according to a mid-year report just published by NAI Issac Commercial Real Estate Services, a Lexington firm.
In particular, “the industrial market experienced a large reduction in vacancy rates,” says Al Issac, president of the NAI Issac. Overall vacancy in the sector sank to just 11.43%, a 27.42% decrease in the last six months, the data show. Last year, the metro area's bulk warehouses, the largest portion of the industrial market, had nearly 1,000,000-square-feet of vacant space. That shrank to 732,713-square-feet and a vacancy rate of 15.49%. The manufacturing and high-tech/research and development sectors of the industrial market remain quite strong; both have vacancy rates less than 7%.
“The total vacancy of the suburban office market showed an increase of 28.33% since year end 2012 ending with a 16.85% vacancy rate,” the report notes. Most of the suburban office market is comprised of class B buildings, the report adds, and the Lexington CBD only has six class A buildings. But the CBD office market saw a decrease in vacancy during the 1st half of 2013, down from over 16% to 13.82%, which represents nearly 369,000-square-feet of available premises.
Still, some developers have shown interest in the building new office space in the metro area. Officials from KDC, a Dallas-based commercial real estate firm, for example, announced this spring that they will develop a new business center at the University of Kentucky's Coldstream Research Campus, a former horse farm that has filled up with dozens of companies and laboratories. KDC is under sub-contract with Sperry Van Ness Real Estate Advisors – Lexington, and plans to begin construction once they get signed leases for 50% of the project's first phase, a three-story, 100,000-square-foot office center.
The 735-acre campus, located at the intersection of I-64 and I-75, sits near both the University of Kentucky and downtown Lexington. It now houses more than 62 companies and 1,360 people that work in biotech, pharmaceutical, equine health and service industries.
Retailers are in better shape overall, with a current vacancy rate of only 6.09%. However, “the total vacancy increased 8.5% from year end 2012.”
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
