MARKET AT A GLANCE Research SOUTH BEND/MISHAWAKA 4Q16 INDUSTRIAL MARKET NEW CONSTRUCTION PROJECTS PROPEL MARKET MOMENTUM The South Bend/Mishawaka industrial market posted a 3.5% vacancy rate for the fourth quarter of 2016, a decrease of 70 basis points from third quarter 2016. Market activity has moved in a positive direction in the last three months as approximately 325,635 square feet was absorbed, rounding out the year-to-date total absorption of 638,485 square feet. The average overall asking lease rate for the fourth quarter 2016 improved to $3.48 per square foot. The South Bend North industrial area, which encompasses a total inventory of 12,242,117 square feet and demands the highest asking lease rate of $5.09 (inclusive of flex space), had the lowest vacancy rate of 1.4% alongside positive absorption of 227,172 square feet at the end of the first quarter. There remains 165,000 square feet under construction on South Bend’s northwest side, keeping with the trend of growth. As available industrial space has tightened, it is expected that speculative construction will continue as in previous quarters. The current industrial base is short on supply to meet today's requirements of industrial users seeking modern facilities that offer 30-foot ceiling height, efficient loading capabilities and ample trailer parking. Businesses are seeking buildings they can occupy quickly, with few available. Such conditions are considered a sign of economic health because they show that developers and their financiers are bullish about the local economy. Economic Conditions The U.S. Bureau of Labor Statistics reported a 4.5% unemployment rate for South Bend / Mishawaka in November 2016. According to the CES survey of employers, there were no jobs lost or gained in November for a total of 141,100 jobs. Overall, the United States gained 178,000 jobs since last month and has a 4.6% unemployment rate. .. www.cressyandeverett.com 35.1M 3.5% 325,635 SF $3.48 Total Inventory Vacancy Rate Quarterly Absorption Average Lease Rate Under Construction Unemployment Rate 4.5% 396K SF 4Q16 (Current Quarter) 3Q16 (Previous Quarter) 3Q15 (Previous Year) 12 Month Forecast Total Inventory (Local Profile) 35.1M SF 34.9M SF 33.9M SF Vacancy Rate 3.5% 4.2% 5.4% Quarterly Absorption 325,635 101,280 168,089 Average Lease Rate $3.48 $3.42 $2.99 Under Construction 396,000 606,000 521,361 Completed Construction 210,000 0 0 MARKET PERFORMANCE 3% 5% 7% 9% 11% $1 $2 $3 $4 $5 4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16 Average Lease Rates (Price/SF) Vacancy (%) AVERAGE LEASE RATE & VACANCY
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MARKET AT A GLANCE
Research
SOUTH BEND/MISHAWAKA4Q16 INDUSTRIAL MARKET
NEW CONSTRUCTION PROJECTS PROPEL MARKET MOMENTUMThe South Bend/Mishawaka industrial market posted a 3.5% vacancy rate for the fourth quarter of 2016, a decrease of 70 basis points from third quarter 2016. Market activity has moved in a positive direction in the last three months as approximately 325,635 square feet was absorbed, rounding out the year-to-date total absorption of 638,485 square feet. The average overall asking lease rate for the fourth quarter 2016 improved to $3.48 per square foot.
The South Bend North industrial area, which encompasses a total inventory of 12,242,117 square feet and demands the highest asking lease rate of $5.09 (inclusive of flex space), had the lowest vacancy rate of 1.4% alongside positive absorption of 227,172 square feet at the end of the first quarter. There remains 165,000 square feet under construction on South Bend’s northwest side, keeping with the trend of growth.
As available industrial space has tightened, it is expected that speculative construction will continue as in previous quarters. The current industrial base is short on supply to meet today's requirements of industrial users seeking modern facilities that offer 30-foot ceiling height, efficient loading capabilities and ample trailer parking. Businesses are seeking buildings they can occupy quickly, with few available. Such conditions are considered a sign of economic health because they show that developers and their financiers are bullish about the local economy.
Economic ConditionsThe U.S. Bureau of Labor Statistics reported a 4.5% unemployment rate for South Bend / Mishawaka in November 2016. According to the CES survey of employers, there were no jobs lost or gained in November for a total of 141,100 jobs. Overall, the United States gained 178,000 jobs since last month and has a 4.6% unemployment rate.
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35.1M 3.5% 325,635SF
$3.48
TotalInventory
VacancyRate
QuarterlyAbsorption
AverageLease Rate
UnderConstruction
UnemploymentRate
4.5%396KSF
4Q16(Current Quarter)
3Q16(Previous Quarter)
3Q15(Previous Year)
12 Month Forecast
Total Inventory(Local Profile) 35.1M SF 34.9M SF 33.9M SF
Vacancy Rate 3.5% 4.2% 5.4%
Quarterly Absorption 325,635 101,280 168,089
Average Lease Rate $3.48 $3.42 $2.99
Under Construction 396,000 606,000 521,361
Completed Construction 210,000 0 0
MARKET PERFORMANCE
3%
5%
7%
9%
11%
$1
$2
$3
$4
$5
4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16
Average Lease Rates (Price/SF) Vacancy (%)
AVERAGE LEASE RATE & VACANCY
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Holladay Breaks Ground On $15 Million FedEx Freight TerminalConstruction is underway on a new $15 million FedEx Freight terminal on the northwest side of South Bend. The 73,000 square-foot terminal, which is expected to open in March 2017, will be northeast of the Huron Building at AmeriPlex at Interstate 80/90 business park. A 215,000 square-foot FedEx Ground facility opened earlier this summer at the business park. FedEx has outgrown their current facility, and the new distribution center will take the place of the existing facility on Ameritech Drive, about a half-mile away. The cross-dock terminal will have about 100 loading positions for trucks, parking for employees and tractor-trailer drivers.
AM General Scores $40 Million Military ContractThe U.S. Department of Defense has awarded a pair of contracts totaling more than $40 million to AM General LLC. The work will be performed in Mishawaka and involves Humvee transmissions and windows. Each contract is for three years and scheduled to be complete in early November 2019. The components are being provided to the U.S. Army. The transmission contract is the largest of the two, a maximum of $32.4 million.
Workers Lay Groundwork For New Carlisle Industrial ParkGround was broken in October on the $4.35 million infrastructure project planned by St. Joseph County officials at the site, located east of New Carlisle. The infrastructure project, slated to be done by May 2017, is a key step in the county’s development of the site,
which will eventually have about 1,000 acres available for businesses to move in. Along with water and sewer lines, the project calls for the installation of a conduit line that will be needed to eventually bring a fiber-optic cable to the area for broadband internet access.
Some unidentified businesses have recently expressed interest in moving into the area, said Bill Schalliol, the County’s Economic
Development Director. Before that can happen, other work will also need to be done in 2017. “The park has to be development-friendly, and we are not quite there yet,” Schalliol said. “We need to have the
ditch moved or in progress, need to have the fiber optics installed, need to have the utilities in place, and the property cleared and zoned. Those are the things we will be doing at full speed in 2017.”
The 700-megawatt plant is slated to be operational by June 2018. As part of the project, a $13 million well-water treatment plant is being built. It will be turned over by the St. Joseph Energy Center to the town of New Carlisle when it’s operational. A $500 million second
phase of the project is being planned that would double the size of the plant. The county sold $9.2 million in 20-year, low-interest bonds to cover costs to develop the industrial park. Bonds are to be repaid with incremental property tax growth in the immediate industrial area.
Holladay Breaks Ground On $15 Million FedEx Freight Terminal
OUR MARKET IN MOTION
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SOUTH BEND/MISHAWAKA4Q16 INDUSTRIAL MARKET
FedEx Freight at Ameriplex | South Bend, Indiana
AM General | Mishawaka, Indiana
Groundwork Starts For 1,000 Acre Industrial Park | New Carlisle, Indiana
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SOUTH BEND/MISHAWAKA4Q16 INDUSTRIAL MARKET
NOTABLE LEASE TRANSACTIONS
Tenant Building Submarket Type Square Feet
Studebaker International Incorporated 701 West Chippewa Avenue South Bend South Renewal 48,000
Naturescene 3371 West Cleveland Road, Suite 112
South Bend North Direct 8,420
Product Development Corporation 3303 William Richardson Court, Suite A
South Bend North Direct 7,500
NOTABLE SALE TRANSACTIONS
Building Submarket Sale Price Price/SF Square Feet
3521 North Home Street Mishawaka North $1,100,000 $19.23 57,204
2401 North Home Street Mishawaka North $940,000 $10.40 90,355
4167 Meghan Beeler Drive South Bend North $1,222,922 $43.99 27,800
Newmark Grubb Cressy & Everett (NGCE) quarterly market reports are a compilation of data from multiple sources. The data is reviewed quarterly and adjusted due to circumstances in the market, such as new construction and demolition.The vacancy square footage is compiled from a combination of online data from multiple major listing services, broker provided listing information and industry knowledge. NGCE has created this report to provide the most accurateinformation possible. We do not assume responsibility, however, for errors, omissions, prior sale, lease or withdrawal from the market.
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“The St. Joseph County industrial market continues its strong performance with vacancy rates
continuing to decrease to historic lows (3.5%). Quality inventory is hard to find with activity in all segments (flex, warehouse/distribution and manufacturing). With Elkhart County’s vacancy rate also
at a historic low (1.7%), companies looking for existing product are being forced to look at their real estate from a regional lens due to scarcity of product and employment labor force availability.
Additionally, new construction continues to strengthen as an alternative as sales prices and lease rates for existing product continue to experience upward pressure due to scarcity of product and high demand. These trends should continue through 2017.”
5102 Dylan Drive | South Bend, IndianaAvailable: 40,817 SFLease Rate: $3.75 PSF NNN + CAMBuilt in 2007, this 148,935 square foot building can accommodate such uses as distribution, office, call center and advanced manufacturing. Available for lease is 40,817 square feet featuring 2 docks, a drive-in overhead door, 24’ ceiling heights, 6” reinforced concrete floors, ESFR fire
protection, T-5 lighting and municipal utilities. The building was the first industrial property developed in the AmeriPlex at Interstate 80/90.
5435 Dylan Drive | South Bend, IndianaAvailable: 90,000 SFLease Rate: $3.95 PSF NNN + CAMCompleted in 2016, this 165,000 square-foot industrial/flex space building offers 90,000 square feet of build-to-suit space for lease. The property is located within a master-planned industrial/business park with access to city utilities, high-speed fiber optic, city incentives, and easy access off I-80/90 and US 20.
1915 Bendix Drive | South Bend, IndianaSize: 64,500 SFList Price: $1,500,000Net leased, single-tenant investment opportunity. New lease in place with quality tenant. High-tech manufacturing facility consisting of 64,500 square feet on 4.49 acres. The building is steel frame structure with masonry covered block and metal siding. The entire facility was updated in 2002 including all new mechanicals and electric service. A new roof was installed in 2016. The building is divided into a warehouse, production and
office areas. The property is located on the northwest side of South Bend near several industrial, warehouse/distribution and professional office parks. St. Joseph County offers low utility costs, a competitive tax structure, real estate tax abatement and state-of-the-art fiber optic digital switching capabilities (MetroNet). The property is within minutes to the South Bend Airport, Blackthorn Corporate Park and the Blackthorn Golf Club. Additionally, the subject property is located approximately 2.5 miles from the I-80/90 Indiana Toll Road and US 20/31 ByPass.
All information contained in this publication is derived from sources that are deemed to be reliable. However, Newmark Grubb Cressy & Everett (NGCE) has not verified any such information, and the same constitutes the statements and representations only of the source thereof, and not of NGCE. Any recipient of this publication should independently verify such information and all other information that may be material to any decision that recipient may make in response to this publication, and should consult with professionals of the recipient’s choice with regard to all aspects of that decision, including its legal, financial, and tax aspects and implications. Any recipient of this publication may not, without the prior written approval of NGCE, distribute, disseminate, publish, transmit, copy, broadcast, upload, download, or in any other way reproduce this publication or any of the information it contains.
