Fourth Quarter
Industrial Market Report
2016
2016
Fourth Quarter Industrial Market Report
03Executive Summary
04National Economy
04Local Economy
04Oklahoma City Industrial Market Leasing
05Net Absorption and Inventory
06Rental and Vacancy Rates
08OKC
Industrial Market Information by
Submarket, Class and Size
09Construction,
Delivery, Net Absoprtion and Vacancy Rate
10Oklahoma City Industrial Market Sales
11OKC
Market Significant Industrial Sale Transactions during Q4 2016
13About NAI Sullivan Group
2016
Fourth Quarter Industrial Market Report
EXECUTIVE SUMMARY
The overall vacancy and rental rates have remained remarkably flat over the
past three quarters with Class A industrial properties lease rate averaging $5.94
per square foot annually with a vacancy rate of 2.5 percent, Class B industrial
properties lease rate averaging $5.26 per square foot annually with a vacancy rate
of 5.0 percent, and Class C industrial properties lease rate averaging $4.93 per
square foot annually with a vacancy rate of 3.2 percent.
The uncertainty of the demand from industrial business growth, especially the oil
and gas industry, is causing limited industrial speculative construction, as there
are only 549,846 square feet under construction. I would expect to see a great
increase in 2017 as the economy improves and as oil and gas companies begin
expansion.
Industrial property sales totaled 30 transactions in Q4 2016 totaling just over $33,000,000 with an average
price of $40.96 per square foot. The most notable transaction was the sale of Hefner Commerce Park at
11301 Partnership Drive, a 137,860 square foot facility that sold for $8,480,000.00, $61.51 per square
foot.
Bob Sullivan
CEO
Leasing Activities
Total Inventory
Sales Activities
122,917,874 SF
Overall Rental Rate
$5.37/SF/YR NNN
Total Vacancy Rate
3.80%
Under Construction
549,846 SF
Number of Transactions
Total Sales Volume
Average Price per Bldg. SF
30
$33,319,500
$40.96
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2016
Fourth Quarter Industrial Market Report
NATIONAL ECONOMY
Kiplinger reports that United States has ended the year 2016 with a GDP rate of 1.60 percent, down from
2.60 percent in 2015. Growth during the fourth quarter is 2 percent, putting second-half 2016 growth
comfortably above the first half’s modest 1 percent pace. Oil price and energy stock has surged since
OPEC reached an agreement to cut production by 1.2 million barrels per day. It still takes time to see
whether OPEC members are able to carry out the agreement they have reached.
Trump’s surprise victory in the November presidential elections has significantly changed the outlook for
United States economy. Trump’s policies include a major fiscal stimulus-tax cutting. The pro-business
policy will increase spending, but the effects may crowd out as the Fed has increased the interest rate in
December, and more interest rate hikes are expected in year 2017.
LOCAL ECONOMY
As OPEC has reached the agreement to cut its daily production, oil prices have been increasing. Signs of
recovery can also be seen in Oklahoma. Oklahoma ended the year with a rig count of 86, which is up by
32 from 54 in February when the oil price was below $30 per barrel. Oil and gas revenue tax collections
was up in October 2016 for the first time in nearly two years. Continental Resources and Devon Energy
has increased their drilling budget for year 2017. We are still seeing layoffs in the energy sector but the
number was much smaller.
According to Bureau of Labor Statistics, Oklahoma City Ranks No. 8 in “Fastest Growing Median Wage
Growth.” Moody’s Analytics also reports Oklahoma City ranks in the top five in the lowest Cost of Doing
Business, Energy Cost, and State & Local Tax categories. Oklahoma continue to attract investment from
in state and out of state. Oklahoma City multi-family sector remains a hot investment spot. If OPEC can
carry out their agreement as planned, we are going to see more projects which was putting on hold
coming to the market in year 2017.
OKLAHOMA CITY INDUSTRIAL MARKET LEASING
The largest lease signings occurred in Q4 2016 included the 131,400 SF lease signed by AAR Corporation
at 3312 S I-35 Service Rd in Oklahoma City, the 47,186 SF lease signed by IDI Distributors at 3701 S.
Thomas Rd. in Oklahoma City, and the 40,225 SF leased by Precision Parts and Re-Manufacturing Co. at
5201 W. Reno Avenue in Oklahoma City.
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2016
Fourth Quarter Industrial Market Report
NET ABSORPTION AND INVENTORY
• The total net absorption was a positive
257,926 SF.
• The total net absorption increased from
187,329 SF at the end of Q3 2016.
• The total inventory was 122,917,874 SF.
• The total inventory increased from 122,792,457
SF at the end of Q3.
•Class-A property net absorption yield was a positive 90,000 SF, increased from 0 SF at the end
of Q3 2016.
•Class-B property net absorption yield was a positive 199,028 SF, decreased from positive
295,912 SF at the end of Q3 2016.
•Class-C property net absorption yield was a negative 31,102 SF, increased from negative
105,223 at the end of Q3 2016.
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2016
Fourth Quarter Industrial Market Report
RENTAL AND VACANCY RATES
• The overall industrial rental rate was
$5.37/SF/YR NNN.
• The overall industrial rental rate increased from
$5.15/SF/YR NNN at the end of Q3 2016.
• The overall industrial vacancy rate was 3.80%.
• The overall industrial vacancy rate decreased
from 3.90% at the end of Q3 2016.
• Class-A property rental rate averaged
$5.94/SF/YR NNN.
• Class-A property rental rate remained the same
compared to the rate at the end of Q3 2016.
• Class-A property vacancy rate was 2.50%.
• Class-A property vacancy rate remained the
same compared to the rate at the end of Q3
2016.
• Class-B property rental rate averaged
$5.26/SF/YR NNN.
• Class-B property rental rate increased from the
$5.09/SF/YR rate at the end of Q3 2016.
• Class-B property vacancy rate was 5.00%.
• Class-B property vacancy rate decreased from
5.30% at the end of Q3 2016.
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2016
Fourth Quarter Industrial Market Report
• Class-C property rental rate averaged
$4.93/SF/YR NNN.
• Class-C property rental rate increased from the
$4.90/SF/YR NNN at the end of Q3 2016.
• Class-C property vacancy rate was 3.20%.
• Class-C property vacancy rate increased from
3.10% at the end of Q3 2016.
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2016
Fourth Quarter Industrial Market Report
OKC INDUSTRIAL MARKET INFORMATION BY SUBMARKET
CBD
Vacancy Rate
West/
Central
OKC South
Moore/
Norman
15.70%
3.50%
4.70%
2.30%
2.00%
$9.73
$4.60
$5.05
$5.20
$7.21
140
417
1,593
1,246
553
42,382,455 SF 19,497,181 SF
7,447,486 SF
Rent per SF
Existing Buildings
Existing SF
Midtown
1,516,236 SF 6,053,511 SF
Sale Price per SF
Cap Rate
$70
$29
$52
$52
$62
9.00%
11.00%
8.20%
8.70%
9.40%
OKC INDUSTRIAL MARKET INFORMATION BY CLASS
Class-A
Vacancy Rate
Rent per SF
Existing Buildings
Existing SF
Sale Price per SF
Cap Rate
Class-B
Class-C
2.50%
5.00%
3.20%
$5.94
$5.26
$4.93
50
1,767
4,547
10,385,978 SF
54,156,420 SF
57,483,293 SF
$42
$38
$43
8.50%
7.70%
14.00%
OKC INDUSTRIAL MARKET INFORMATION BY SIZE
Up to 30,000 SF
Vacancy Rate
Rent per SF
Existing Buildings
Existing SF
Sale Price per SF
Cap Rate
From 30,000 SF
$6.54
$4.52
3.10%
4.50%
5,734
728
48,416,600 SF
74,836,291 SF
$50
$32
12.30%
8.20%
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2016
Fourth Quarter Industrial Market Report
UNDER CONSTRUCTION, DELIVERY AND NET ABSORPTION
At the end of Q4 2016, there was 549,846 SF of industrial space was under construction. The two largest
industrial properties under construction are the 80,000 SF property located at 5510 SW 29th St., which is
scheduled to be delivered in January 2017, and the 80,000 SF Scott Rice Warehouse at 6910 N. Bryant
Avenue, which is scheduled to be delivered in January 2017. The average rental rate for industrial properties
under construction is $7.34/SF/YR NNN, and $8.13/SF/YR NNN for newly built industrial properties.
Top under construction industrial properties can be seen in the following table.
Under Construction
Building Address
City
Rentable Building Area
Delivery Time
5510 SW 29th St
Oklahoma City
80,000 SF
Jan 2017
6900 N Bryant Ave
Oklahoma City
80,000 SF
Jan 2017
6910 N Bryant Ave
Oklahoma City
80,000 SF
Jan 2017
6707 N Interstate Dr
Norman
55,000 SF
Dec 2017
6707 N Interstate Dr
Norman
35,000 SF
Dec 2017
14000 N Harvey Ave
Edmond
15,851 SF
Feb 2017
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2016
Fourth Quarter Industrial Market Report
OKLAHOMA CITY INDUSTRIAL MARKET SALES
During Q4 2016, there were 30 transactions totaling
$33,319,500. The largest individual industrial property
transaction based on dollar volume was the sale
of the 137,860 SF Hefner Commerce Park at 11301
Partnership Dr. in Oklahoma City. TOKC-Northgate
LLC purchased this property from JCG LLC V for
$8,480,000, or $61.51/SF on Oct. 6, 2016.
Summary
Number of Transactions
Total Sales Volume
Average Price
Average Size SF
30
$33,319,500
$1,148,948
27,368 SF
Average Price per Bldg. SF
$40.96
Average Cap Rate
9.60%
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2016
Fourth Quarter Industrial Market Report
OKC MARKET SIGNIFICANT INDUSTRIAL SALE TRANSACTIONS DURING Q4 2016
Property Name: Hefner Commerce Park
Address: 11301 Partnership Dr., OKC
Sale Price: $8,480,000
Building Size: 137,860 SF
Sale Price per SF: $61.51
Sale Date: 10/06/2016
Property Name: 3501 N Santa Fe Ave.
Address: 3501 N Santa Fe Ave., OKC
Sale Price: $5,420,000
Building SF: 206,680 SF
Sale Price per SF: $26.22
Sale Date: 10/06/2016
Property Name: 1009 NW 68th St.
Address: 1009 NW 68th St., OKC
Sale Price: $1,850,000
Building SF: 27,500 SF
Sale Price per SF: $67.27
Sale Date: 10/03/2016
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2016
Fourth Quarter Industrial Market Report
Property Name: 4532 Enterprise Dr.
Address: 4532 Enterprise Dr., OKC
Sale Price: $1,800,000
Building SF: 33,800 SF
Sale Price per SF: $53.25
Sale Date: 10/03/2016
Property Name: 600 W California Ave.
Address: 600 W California Ave. OKC
Sale Price: $1,500,000
Building SF: 17,500 SF
Sale Price per SF: $85.71
Property Name: 124 NW 8th St.
Address: 124 NW 8th St., OKC
Sale Price: $1,450,000
Building SF: 19,180 SF
Sale Price per SF: $75.59
Sale Date: 11/18/2016
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2016
Fourth Quarter Industrial Market Report
NAI SULLIVAN GROUP
NAI Sullivan Group is a leading global service provider offering
a full range of premier services, customized to fit your need
and exceed your expectations. Our talented and experienced
professionals provide benefits to large institutions and small
business owners alike. We are your single point of contact for
customized real estate services.
NAI Sullivan Group strives for excellence in all facets of
real estate services in order to maintain our position as an
industry leader. Our team transforms forward-thinking ideas
into cutting-edge applications, to achieve maximum results
for our clients, company and community.
Whether around the corner or around the world, NAI Sullivan
Group is a dynamic member of NAI Global, the world’s
leading managed network of commercial real estate firms.
With over 6,700 professionals, more than 375 offices and
over 380 million square feet of properties managed, we bring
together people and resources to deliver results for our clients
wherever needed. Our clients come to us for our extensive
knowledge. They build their businesses on the power of our
global managed network.
NAI Sullivan Group provides a complete inventory of office,
industrial and retail properties, including those that are fully
occupied. It contains thousands of details on every facet of
every building tracked. Also, NAI Sullivan Group provides
detailed information on all contacts and companies in various
markets.
NAI Sullivan Group is a leader in the adoption of new
technologies to improve business operations as a means
of speeding communications, optimizing performance,
delivering the highest quality services to clients and facilitating
the sharing of best practices among our brokers.
CoStar Group is the primary provider for commercial real
estate information, analytics and marketing services. CoStar
conducts extensive local market research to produce and
maintain the largest and most comprehensive database of
Commercial Real Estate information. Their online services
enable the sales associate to analyze, interpret and gain
unmatched insight on commercial property values, market
conditions and current availability.
REALTrac™ Online is NAI Global’s web-based transaction
management software, which helps to coordinate projects
and facilitate the transaction cycle. REALTrac™ enables the
Buyer, the Seller, the Lessee and the Lessor to view online the
progress of their transaction.
STARS™ is an acronym which stands for Strategic
Transaction Administration and Reporting System. STARS™
is NAI’s proprietary system for providing a timeline of events
to clients in transactions.
LoopNet Inc. is one of the leading information service
providers to the commercial real estate industry; it delivers
a comprehensive suite of products and services to meet the
national and local needs of commercial real estate firms,
organizations and professionals. LoopNet members can list,
search, market, research and finance commercial real estate
properties over the Internet.
For more information, please visit our website:
www.naisullivangroup.com
NAI Sullivan Group has launched a new application for the
iPad and iPhone. This app is free of charge and is available
for download in the Apple App Store under NAI Sullivan
Group. Clients can use the app to review all our company
listings, find agent contact information, perform calculations,
review our current market reports and much more. This app
allows a client to simply take a photo of the property they are
interested in and their request will instantly be submitted to
the sales associate of the client’s choice. The associate will
then contact the client with details of the property in question.
Resources mainly come from CoStar, The Oklahoman, and The POINT.
Download the NAI Sullivan Mobile App
FREE from the App Store!
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2016
Fourth Quarter Industrial Market Report
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