The 41.6-million-square-foot Richmond warehouse/ distribution market saw occupancy improve slightly in the second quarter of 2012. Vacancy fell 30 basis points to 14.3%, and was down 280 basis points over 12 months. After 103,000 square feet were absorbed net in the first quarter, the second quarter followed strongly with 124,000 square feet of demand. There is very little warehouse/distribution (or, for that matter, Flex/R&D) construction occurring here, any net absorption cannot fail to help occupancy to some extent. The rate is forecast to remain close to 14.0% for the next few years. Asking and effective rents showed some gains in the second quarter, rising by 0.8% and 0.9%, respectively, to $3.89 psf and $3.53 psf. These rates are both down 0.8% year-over-year, however. Whatever gains are realized on the occupancy front are not being felt in the rental arena. August data show vacancy at 14.2% and asking and effective rents down 0.3% and unchanged, respectively. Reis forecasts little change in the vacancy rate and gains of 2.3% and 1.7%, respectively, for asking and effective rents for all of 2012.
For the 5.7-million-square-foot Flex/R&D market, net absorption was negative 48,000 square feet in the quarter, wiping out the first quarter’s 22,000 square feet on the positive side. Three Flex/R&D buildings, each at 12,000 square feet, are planned for Parham Forest West on Parham Road in the Northwest submarket. Vacancy increased 90 basis points over the quarter to 18.4%, and is up 100 year-over-year. Asking and effective rents fell by 0.1% and 0.3%, respectively, over the quarter to $7.42 psf and $6.62 psf, and are down 0.5% and 1.2% over 12 months. This is not a good market for rents. Minimal gains of less than 2.0% are forecast for 2012 and 2013.
In their second quarter 2012 report, Cushman & Wakefield report overall industrial vacancy at 10.5%, down 60 basis points year-over-year, and a direct asking rent of $4.28 psf, up 0.05% year-over-year. Despite a rough second quarter, the industrial market is slowly getting stronger, this source reports.