Speculative construction is finally taking root in the metro industrial real estate market, with a handful of projects now under way.
Bob Puckett, the industrial specialist for Price Edwards who is about to release the company's first Multi Tenant Industrial Market Survey, anticipates these speculative projects will have a significant impact on the sector, which at 5 percent has been plagued by one of the lowest vacancy rates in the nation.
"At the current time we are adding around 456,000 square feet of bulk warehouse space into the market," he notes.
That segment has the tightest vacancy of any industrial type in the metro area, according to the survey, with only 3.3 percent vacant. Puckett contends the vacancy is too low -- opening the door for the new speculative construction to help balance the sector.
"We have suffered in our ability to attract new businesses into town because there has not been any type of that space available," he explains. "Although the vacancy will go up to some extent, it will be a very healthy thing because it will signify other choices."
With rental rates of new construction expected to break the $4 per-square-foot mark, rates have finally reached the point to justify large multitenant construction. As a result, Puckett expects to see class B and C rates in larger industrial property rise over the next couple of years. Now class B rates average around $3.60 per square foot and class C around $3.
Four new speculative projects are under way, with plans to began taking on tenants by the end of the year. The Mid America Business Park, a 50-acre development at Interstate 240 and S. Air Depot, has already completed one 100,000-square-foot warehouse with another one planned for completion by September of this year.
While most of Oklahoma City's industrial development has been centered in the southwest sector, which comprises 71 percent of the total market, the Mid America Business Park has chosen to build in a historically non-industrial area. It also has positioned itself to benefit from the possibility of Interstate 35 being named a major international trade route.
"We will have space for warehousing, distribution, light industrial and final assembly of products," notes Russell Vaught, co- developer, "which makes this an ideal location for businesses wanting to participate in the growing trade with Canada and Mexico."
Another significant project just getting under way is the $12 million Airport Distribution Center being constructed by Northwestern Mutual Life Insurance at 5200 SW 36 St. The Milwaukee-based company expects to have phase one, consisting of a 210,000-square-foot distribution warehouse, completed in October.
The lack of industrial space has made it difficult for city leaders to attract new business to Oklahoma City, which has caused the city, the Greater Oklahoma City Chamber of Commerce and the commercial real estate community to all join together in helping spawn new industrial development. …