|Trader Joe’s new 700,000 s/f distribution center is now under construction at Phoenix Crossing;|
HARTFORD:, The Connecticut/Western Massachusetts chapter of SIOR announced the results of its semi-annual membership survey of commercial real estate market conditions. The survey is based on market activity for the period July through December, 2017 within Connecticut and western Massachusetts.
SIOR survey results point to “a continuation of the overall positive outlook established earlier in 2017. The industrial sector continues to outperform the office sector and overall the results indicate a market that is generally stable to improving.”
There was a negative outlook for the office sector, but members noted improving market conditions were in the majority (55%) which is a slight increase from the prior survey. Members experiencing a stable market decreased to 40% and those experiencing a decline remained stable at 5%. Predictions for 2018 are slightly more positive than previously with 60% expecting improvement, 40% anticipating no change, and no responses expecting a decline.
Predictions regarding lease rates for 2018 were positive for industrial space which has been consistent for multiple surveys and members forecast an increase (63%) or no change (37%). Office lease rates are largely expected to remain unchanged (60%) although there is a sizable amount of negative sentiment as 35% of the members forecast a decline and a small group expects rates to increase (5%).
Expectations for market vacancy rates for the first half of 2018 are “once again more favorable for the industrial sector than the office sector.”
Responses for the industrial sector forecast that vacancy rates will decrease (75%) or remain unchanged (25%). Predictions for office vacancy rates forecast an increase in vacancy rates (42%) with a slim majority (53%) expecting rates to remain unchanged and a limited number of responses forecasting a decrease (5%).
The majority of members do not anticipate new development (70%) in 2018 with the remainder predicting an increase (20%) in development or a decline (10%). Expectations regarding growth by users indicate no change (70%) or expansion (30%). Comments by members note the strong showing by the industrial market and anticipated continued strong demand.
Major Facilities Being Built for Distribution
Underscoring members’ comments concerning the industrial real estate market, the report nots “a few of the larger new industrial developments currently in the works. Amazon will be building 855,000 s/f (finished space to be over 1 million s/f counting a planned mezzanine area) in North Haven, on the site of the former Pratt & Whitney facility. The largest spec industrial facility in Connecticut for decades, 403,000 square foot spaceand known as the County Line Industrial Park, is being developed by Scannell Properties just off I-91 in Cromwell.
In Bloomfield, Trader Joe’s new 700,000 s/f distribution center is now under construction at Phoenix Crossing; and a few miles away Windsor town officials recently announced Griffin Industrial will be constructing a 288,000 s/f warehouse/distribution facility on behalf of Ford Motor Company at 220 Tradeport Drive.
Cutler Associates of Worcester, Mass. was chosen by IDS Real Estate Group of California to build the new regional distribution center for Trader Joe’s.
Being developed on a 66-acre site, the 55-acre campus will be comprised of a 600,000 square foot cross-dock distribution facility with RTE food processing and produce packing space; a 90,000 square foot building for frozen food storage; a 6,200 square foot maintenance building; and parking areas for workers and trailers. The company says “when it’s up and running, the facility will employ approximately 675 people, including 150 transportation jobs.”