Space Available

Tenants closing or downsizing and the debut of new industrial space in the past year have continued the buyer’s market for companies seeking warehouse and flex spaces. 

Businesses that are surviving and moving into the market are commanding aggressive rent deals, says Randal L. Mercer, a partner at CB Richard Ellis, Fort Myers-Naples. “Some businesses are actually growing, and they’re moving to a little bit larger space but at a cheaper rent,” he says. 

Average lease rates in Lee County are $5.70 per square foot, net, according to his firm’s data. Flex-only average rents are $7.43 per square foot, net, while the average industrial rent is $5.28 per square foot, net. 

“Many spaces are being offered under $4 per square foot, net, and tenants are becoming more active in this price range,” says Jim Garinger, Colliers Arnold principal and managing director in Fort Myers. “The Lee County industrial market is deep into the recessionary cycle, and we believe it has the longest distance to travel to recovery.” 

Even rents reported as low as $5 to $7 per square foot may be misleading, because of hidden concessions ranging from free rent to additional tenant improvements, Mercer says. 

Rates in Collier County are down 30 to 50 percent compared with two years ago, says Christine Gonnering Martin, an industrial realtor with Investment Properties Corp. of Naples. 

Average asking lease rates in the first quarter 2009 were $7.63 per square foot, compared with $8.20 at year-end 2008, according to CB Richard Ellis’ analysis of buildings 20,000 square feet or greater (excluding owner-occupied properties). For flex space only, it’s $10.22 per square feet. The average asking rent for other industrial space is $7.19 per square foot.