Louisville Real Estate News

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Record sales, leasing spark more industrial development
John R. Karman III
Business First Staff Writer

Sales and leasing activity in the local industrial market reached record levels in the fourth quarter of 2005 — a fact that’s not going unnoticed among regional and national developers looking to capitalize on the demand for bulk space.

New construction starts are expected to add more than 3.3 million square feet to the area warehouse and distribution inventory during 2006. Now, attention turns to finding enough users to fill that space as it comes online.

“We have more space coming available than ever before,” said Phil Charmoli, a broker with Commercial Kentucky Inc., a Louisville real estate brokerage. “The question is whether the demand will be able to keep up with that pace.”

Charmoli is confident that it can, and he points to several advantages the local area has over competing markets as the reasons for interest in southern Jefferson and Bullitt counties.

Developers and companies are drawn to the area because of its available land, access to Interstate 65 and proximity to Louisville International Airport and United Parcel Service Inc.’s Worldport international air hub located there, Charmoli said.

The location makes Greater Louisville particularly attractive to third-party logistics, pharmaceutical, and electronics and computer-repair firms.
Sales and leasing activity reached 8.6 million square feet in 2005

Charmoli has reason to be optimistic about the prospects for filling space being developed in South Louisville and Bullitt County.

Fourth-quarter sales and leasing activity of 2.34 million square feet brought the year-end total to a record 8.6 million square feet — well ahead of last year’s total of 6.84 million square feet, according to a market overview recently compiled by Commercial Kentucky.

In addition, fourth-quarter overall absorption of 1.2 million square feet pushed the year-end total to more than 2.5 million square feet, which was the highest year-end total since 1999.

More than 55 percent of total overall absorption occurred in the warehouse and distribution sector, 40 percent was in the manufacturing sector, and the remainder was in the office and service sector.

“We still don’t see any slack-off, especially in the bulk market,” Charmoli said, referring to demand for spaces of more than 100,000 square feet. “We’ll continue to be strong and feel like we will probably break all net absorption records in 2006.”
Fourth-quarter vacancy rate dipped despite new construction

Construction completions for the fourth quarter totaled more than 1.2 million square feet, which boosted the year-end mark to more than 1.8 million square feet of newly completed industrial space.

That marked the highest level of new construction in the local area since 2001 and eclipsed last year’s total of 1.04 million square feet.

Despite the new construction, the overall industrial vacancy rate dropped in the fourth quarter to 7.3 percent from 7.4 percent. The figure stood at 9.2 percent at the end of 2004.