TEXAS SNAPSHOT, MAY 2011

Lubbock Industrial Market

Hallmark

The Lubbock industrial real estate market continues to be very stable due to a fairly healthy local economy. With unemployment at only 5.8 percent employers have slowly been expanding their businesses and their facilities. While there isn’t any speculative industrial construction ongoing occupancy rates are at multi-year highs and there has been some owner occupied new construction over the past year. Occupancy rates are estimated to be in the high 80s to low 90s percent range with most vacancies in older properties. A LoopNet search for industrial properties for lease only revealed one property more than 50,000 square feet available in the market. Industrial/warehouse space in the 5,000 to 25,000 square feet range is readily available with lease rates for older properties with lower ceiling heights being in the $1.50 to $2.50 square feet/year NNN range. Newer buildings with better amenities are leasing at $3 to $4 square feet/year NNN. There are very few lease concessions available to tenants. There have been very few sales in the last year.

Most of the new industrial construction during the past several years has been build to suits for owner occupants in the 1,100-acre City of Lubbock Industrial Park and Rail Park located along Interstate 27 north of town by the Lubbock International Airport. The park is operated by the Lubbock Economic Development Alliance who reports that their $20 million investment in land and infrastructure has created over $124 million in private investment. It has been a particularly attractive area for new businesses relocating to the area. Employers bringing new jobs to the city are able to get fully developed, ready to build industrial sites for free along with employee training benefits and property tax abatements on new plant and equipment.

With last year being one of the better cotton crops in recent years and with record high cotton prices the trickle down effect through the local economy has meant improving business for many sectors. The outlook is for steady, continued growth in the industrial sector and improving market lease rates.

— W. Wesley Hallmark, CCIM, is a senior investment advisor with Sperry Van Ness | Hallmark & Associates, Inc.

©2011 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.