The final unit of the recently built Train Bridge Loop flex space project was leased in January.
No doubt about it, demand for industrial space in Missoula is through the roof. Sterling CRE Advisors completed numerous industrial transactions in 2019 with many more in the pipeline. Read on to gain insights on the Missoula industrial trends and warehouse marketing with information those sales and leases and our independent research efforts.
Missoula Industrial Overview
2019 was a busy year for leasing activity, with vacancy seeing a small .56% increase over 2018. While sales activity of industrial property was down, median sales price was up. Missoula and other major Montana markets are well positioned to benefit as users fleeing saturated markets look to break into tertiary areas which better fits their supply chain model.
Missoula Industrial Property Sales Activity
Overall transaction volume was down in 2019 with only thirty (30) sale transactions when compared to sixty-eight (68) transactions over the course of 2018. The total 2019 industrial sale transaction figure does include two (2) self-storage facilities and three (3) auto repair facilities. The median sale price per square foot for industrial property in 2019 came in at $103.10/sf resulting in a 3.61% increase over 2018’s median figure of $99.51/sf. The map below shows the locations of 2019 sales.
Missoula Industrial Leasing Trends and Activity
On the leasing front, the median industrial lease rate came in at $7.18 per square foot which is a $1.48 per square foot drop from the 2018 average. This decline can be attributed to absorption of properties located further out from Missoula’s core which yield lower rates than in-fill sites, leasing of properties with a heavier warehouse component, and older properties with more deferred maintenance than those absorbed in the previous year. As of year-end 2019 delivered a total of 69,750 square feet of new space and ended the year with a vacancy rate of 5.7% in the industrial sector.
Missoula Industrial Development Cycle
Development activity continues in the industrial market. Currently over 90,000 square feet is under construction with approximately 250,000 additional square feet in planning. These new projects will be rapidly absorbed if the lease pace of 2019 continues. Missoula is still in the expansion phase of the Industrial market cycle, with declining vacancy rates concurrent with deliveries of new square footage. Sterling CRE’s estimate of where we are located in the market cycle can be seen below: