Will Current Speculative Construction Satisfy Demand?
Northern California’s Central Valley industrial market continues to experience a dramatic increase in speculative construction. The vacancy rate in San Joaquin County decreased to 4.8 percent. In order to meet demand, over 6.1 million square feet of new industrial construction is currently underway. Of the 2.5 million square feet of speculative construction to be delivered in the third quarter, 1.6 million square feet has already been pre-leased. Average asking lease rates continue to be driven upwards, with landlords realizing the value associated with limited available space. Newly delivered Class A developments command a premium over second and third generation space. The average asking lease rate for San Joaquin County increased by $0.03 from the previous quarter to $0.48 per square foot, triple net.