The vacancy rate for the Huntsville industrial market fell for the fourth straight year in 2014 to 8.97%. This rate marks an improved vacancy rate of over 3% from the 12.28% registered in 2011. The Huntsville vacancy rate is below the national average of 10.3%.
The national industrial market has seen steady, positive improvement since 2010. The national average declined by 20 basis points in 2014 and has not dropped for 19 consecutive quarters since the rate peaked at 14.6% in the 2nd quarter of 2010. National forecasts are predicting continued strength in the industrial market and vacancy rates to fall again in 2015.
The levels of absorption experienced in the 4th quarter of 2014, over 60 million square feet, represented the best quarter since 2005. The Huntsville industrial market experienced positive absorption for the third straight year in 2014 with a net 319,000 square feet of industrial inventory leased. This adds up to a million square feet of net positive absorption of industrial space since 2012.
New construction for large industrial building was steady nationally with over 110 million square feet delivered. This new construction has not outpaced the demand for industrial space yet as vacancy rates continue to drop. The Huntsville market saw little activity in new construction again in 2014. This will change in 2015, however.
Recent Industrial Announcements of Note
Remington Outdoor Company announced plans to open a manufacturing plant in Huntsville that could eventually employ 2,000 workers. The company will occupy the former Chrysler building in Jetplex Industrial Park. Remington plans to upgrade the facility then will look to start production in late 2015. Huntsville was chosen over 24 other sites. The 800,000 + square foot facility is one of the largest buildings in North Alabama.
Carpenter Technology Company opened its new $518 million metal plant in Tanner. The 500,000 square foot facility is located on 230 acres in Limestone County and will house 200 workers. The building will be used to manufacture alloy steel products to be used in the aerospace, energy and medical industries. The plant will have the ability to manufacture 27,000 tons of allow materials.
Submarket Review:
Jetplex Industrial Market Snapshot
Total Submarket: 12.6 million sf
Single Tenant SF: 8,457,717
Multi-Tenant SF: 4,157,739
Single Tenant Vacancy: 1.00%
Multi-Tenant Vacancy: 33.18%
Overall Vacancy: 11.26%
The overall vacancy rate for the Jetplex Industrial Park was 11.26% in 2014, a decrease from the 13.02% vacancy rate in 2013. Most of the drop in vacancy was due to the announcement that Remington would occupy the 800,000 square foot former Chrysler building.
Jetplex Industrial Park is Huntsville’s largest industrial base and represents 58% of the Huntsville industrial market. The Jetplex Industrial Park is comprised of several smaller markets that surround the Huntsville International Airport and the Intermodal Center. Jetplex Industrial Park contains 1,470 acres and offers Foreign Trade Zone #83, U.S. Customs Port of Entry and interstate access via I-565. Jetplex South Industrial Park contains 1,400 acres and is located just south of the Jetplex Industrial Park. Lowe Industrial Park is a 900-acre park originally designed to encompass the growth of Intergraph Corporation.
Recent developments in the Jetplex Industrial Market:
1) Science and Engineering Services LLC (SES) announced that it expects to add 450 jobs in Huntsville over the next five years as part of an expansion of its Alabama manufacturing operations. After the expansion, SES will occupy more than 1.3 million square feet in the Huntsville market. SES is a leading provider of repair and maintenance overhaul services for airplanes, helicopters and unmanned aerial vehicles.
2) National Technical Systems (NTS) acquired Wyle Labs. The acquisition resulted in NTS becoming the largest independent testing lab in the United States. The Huntsville facility is located on Madison Boulevard and is a 93-acre, 163,000-square-foot facility.
3) The 20,875 square foot former Prep-Tech building at 124 Electronics Circle was purchased by Industrial Properties of the South. The flex building sold for $24.54 per square foot. The facility was built in 1989 and sits on 4.5 acres of land.
4) Palco, a Huntsville based reverse logistics firm, is looking to expand into the Asia-Pacific market. The company has already opened an office in Malaysia where the company provides testing, configuration and repair of circuit board assemblies
Major area tenants include: Remington, Yulista, Navistar, SES, Georgia Pacific and Kohler.
Chase Industrial Park Snapshot
Total Submarket: 5 million sf
Single Tenant: 5,025,190 sf
Multi-Tenant: 102,000 sf
Single Tenant Vacancy: 1.32%
Multi Tenant Vacancy: 0%
Overall Vacancy: 1.29%
The vacancy rate for Chase Industrial Park was 1.29% in 2014, down from the previous year’s 1.59% vacancy number. Chase represents 22% of the entire Huntsville industrial market.
Chase Industrial Park is a 1,700-acre park located in northeast Huntsville that was developed by the Madison County Commission. Chase Park is almost exclusively single tenant employers. There are 50 acres available in the park for new development. Products manufactured in the park include medical instruments, DVD, copper plastic products and pharmaceuticals.
1) PPG Industries, a leading supplier of aerospace transparences that are used in flight-deck and passenger-cabin windows, was recently recognized by Gulfstream Aerospace Corporation as its supplier of the year.
Major area tenants include J and J South Central, Cinram, Qualitest Pharmaceuticals, PPG Industries, Available Plastics, Hart & Cooley, Kommerling, and Schwarze Industries.
North and Central Huntsville Industrial Market
Total submarket: 4.63 million
Single Tenant: 3,631,164
Multi-Tenant: 1,001,873
Single Tenant Vacancy Rate: 12.90%
Multi-Tenant Vacancy Rate: 5.26%
Total Vacancy Rate: 11.20%
The vacancy rate for the North/Central Huntsville industrial market was 11.20% in 2014. The North/Central Huntsville industrial market is comprised of just over 4.6 million square feet and represents 20% of the total Huntsville industrial market. Most of the buildings in this market have a smaller square footage footprint than buildings in the Jetplex or Chase industrial parks.
Many of the buildings in this market have been recently constructed and are located along the Highway 53 corridor with good access to North Alabama and Southern Tennessee. The tenant mix in the area consists of companies in the automobile industry, local and national service companies and defense companies.
Recent developments in the North Industrial Market:
1) Toyota Motor Manufacturing and Calhoun Community College announced plans for a new education-to-work initiative. The program is called the Advanced Manufacturing Technician and each student is expected to attend five semesters of classroom instructions in addition to working part-time at the Toyota plant.
2) Teledyne Brown was selected by NASA to design and build the Launch Vehicle/Stage Adapter (LVSA). The five-year, 460 million contract enables Teledyne to build the LVSA that will be used to connect the rocket’s core with the interim cryogenic propulsion stages.
3) GE Intelligent Platforms announced the expansion of its facilities on Memorial parkway. The new building will add 50 new jobs to the existing facility that is currently home to 235 employees. The new facility will enable GE to test and analyze the effects of vibration as well understanding and implementing innovate cooling technologies.
4) Verizon Wireless announced plans to add 300 employees to its workforce in Huntsville. The jobs will be located at the Verizon Wireless call center on Quality Circle in Thornton Research Park. The 152,000 square foot building was built in 2007 and is 100% occupied by Verizon.
Major area tenants include: Toyota, Cinram, Verizon Wireless and Raytheon.