Increased vacancy in research and development
The last quarter of 2017 continued to see tight vacancy across the market. Despite slight positive absorption over the year, overall vacancy rose for the first time during the fourth quarter with the addition of 4580 Paradise Blvd. Prime Theraputics vacated the property in Q2 this year. The nearly 70,000 SF property is 100% vacant and currently marketed as R&D Flex space. The addition of the property to the industrial inventory increased the overall vacancy rate 17 basis points from 4.83% to 5.00%. Without the addition of Prime Theraputics, the overall vacancy of 4.83% would be a 15 basis point decrease from the previous quarter’s vacancy rate and nearly 50 basis points lower than the national industrial vacancy rate.
R&D/Flex was the only property type that saw increased vacancy. R&D/Flex vacancy is up nearly 2% over last quarter. The addition of 4580 Paradise accounts for an increase of 1.3% vacancy. General Industrial continues to see vacancy in the 2% range. Demand holds strong but industrial inventory supply continues to be stagnant.
Key factors this quarter
- R&D Flex had the largest increase in vacancy in Q4 primarily due to added inventory
- Tax Cuts and Job Act of 2017 is likely to promote especially strong corporate growth in the industrial market
- The thriving oil and gas industry have resulted in large GDP gains for the state. New Mexico saw the second highest state GDP growth in the nation for fourth quarter