I was recently asked to participate at the University of South Alabama’s 3rd Annual Gulf Cost Commercial Real Estate Summit by providing an overview of the area’s industrial market and predictions for 2010. This one-day event, sponsored by the Mobile Area Chamber of Commerce, was held at the Arthur Outlaw Convention Center in Mobile, offering continuing education credits for professionals in numerous fields. The goal of my presentation was to explain how the industrial market in Mobile and Baldwin Counties has weathered the economic downturn better than other geographic areas, as well as defining its ongoing challenges.
In preparing to give the Industrial Market Overview for the Gulf Cost Commercial Real Estate Summit III and Market Review, I have had the opportunity to step back and reflect on where we have been and where I think we are going. In order to understand where our market is today I believe it is important to look back to Hurricane Katrina and what has transpired since then. Immediately following the storm, warehouse space in our market was leased immediately since we were the closest port city that didn't have huge infrastructure damage. We were able to rebound quickly and provide space for companies that were affected by the storm. Consequently, we had very little vacancy. Furthermore, developers took advantage of the financing and tax incentives offered post Katrina which resulted in a number of new industrial properties in our market. Many of these came online right as the economy was starting to falter which has resulted in increased vacancy rates over the past two or so years.
However, I believe that the industrial market for our area has weathered this economic downturn much better than other areas but still has its challenges. I think we will see a concerted effort in 2010 to maintain existing occupancy levels and minimize, as much as possible, the downward trend in rental rates. However, as in many other property segments, this is not a time in which you want to have to fill vacancies so there will be a strong emphasis on retaining existing tenants. Furthermore, we have had a number of large projects in our area including the ThyssenKrupp Mill in Calvert and the Choctaw Point Container Terminal that should help generate activity in the future.
