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After last week's doom-and-gloom column about the sad state of Southwest Florida's office market...
December 15, 2008 - Gary Tasman
I wish I could deliver a brilliantly upbeat report about the local industrial market but I make it a policy to convey the number and to tell the truth. The following industrial market update was in last Saturday's "Commercial Corner" column and is based on an analysis of Cushman & Wakefield's latest research data for our area.
Approximately 11,400 jobs were lost in the combined metro areas (Lee and Collier) between the third quarter of this year, most of them in construction, retail and professional/business service sectors. As a result of this substantial job loss, the area's current unemployment rate is one of the highest in the Southeast, exceeding 10% for lee and Collier counties combined.
The slowdown in job growth, which directly correlates to demand for industrial space, facilitied another sluggish quarter for the Fort Myers/Naples industrial market. Just as overall vacancy escalated to its highest level in 18 months, average asking rental rates continued to trend downward and speculative construction activity declined dramatically due to the sustained decrease in tenant demand.
Market-wide, overall vacancy registered 10.1% at the close of the third quarter of 2008, up 2.8% from vacancy recorded this time last year. This is the highest vacancy rate of all the major industrial markets in Florida. For all the stats in my Saturday article please email me at email@example.com and I will be happy to send you a copy.
Even though the local economy continues to labor under the weight of the correcting housing market and increase in unemployment, the area's long-term growth dynamics remain strong, particularly in the industrial sector. Just remember, that's the long-term view.
All of this strongly suggests that weak tenant demand in Southwest Florida will likely persist through much of 2009. However, as the excess space is absorbed, I expect that rental rates will stabilize. Exactly when those rates will rebound is contingent upon when our unemployment picture begins to improve. Market research leads me to believe that the rebound will occur at some point during the second half of 2009. As it does, there will be increased demand and industrial space in our local market.
Thank you for reading my blog and keep on reading my column. I appreciate all of the readers who take the time to make a comment and send me feedback...keep on listening.
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Gary Tasman, executive director of Cushman & Wakefield of Florida, Inc.