The industrial sector experienced a banner year in terms of absorption and net occupancy growth in 2018, and experts are predicting very little softening heading into 2019. The combination of limited inventory and high utilization rates of existing footprints should continue to prove favorable for industrial owners and developers moving forward.
Nationally, the industrial market should continue to experience growth from retail sales linked to e-commerce and increased manufacturing activity.
Locally, Missoula experienced an influx of flex build-to-suit deliveries in 2017 resulting in a bump in overall rental rates averaging out at $8.78/SF. Despite fewer new build projects in 2018, the Missoula industrial market rental rates saw only a slight decline to $8.66/SF overall. Early research figures show upwards of 115,000+ square feet of industrial space delivered in 2018 with close to 200,000 square feet in the pipeline for 2019 into 2020. There is speculation of modest rate decline nationwide heading further into 2019, however if supply remains limited in various Montana markets demand may keep rates holding tight.
Average price per foot of industrial property in Missoula averaged out at $99.51/SF in 2018, up 5.6% from 2017’s average of $93.91/SF. Industrial land proved popular among users and developers in 2018 with prices for industrial land in Missoula county averaging $4.16/SF. Nationally, the industrial market should continue to experience growth from retail sales linked to e-commerce and increased manufacturing activity. Rising interest rates remain the biggest threat to the economy and to the industrial real estate sector. While the real estate market may experience some contraction, all signs point to continued growth with quality developments continuing to attract businesses to Montana markets.
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For your next industrial property acquisition, disposition or development, you’re invited to contact Claire Matten