2019-07-12_DTZ戴德梁行_Industrial_Q2_2019_Central_Connecticut_2页_415kb

Central Connecticut Industrial Market Summary

Core Content

The Central Connecticut industrial market is experiencing robust economic and market growth, driven by strong employment trends and high demand in key sectors such as manufacturing, transportation, and warehousing. The market is characterized by limited availability, low vacancy rates, and rising asking rents, indicating a healthy and competitive environment.

Key Economic Indicators

• Connecticut Employment: Increased from 1.82 million in Q2 18 to 1.84 million in Q2 19, with an estimated 1.1% growth over the next two years.
• Connecticut Unemployment: Declined from 4.2% in Q2 18 to 3.8% in Q2 19.
• U.S. Unemployment: Decreased from 3.9% in Q2 18 to 3.6% in Q2 19.

The manufacturing sector has outperformed the national average, with a 2.8% growth rate between 2016 and 2018. This is attributed to the growth in transportation equipment manufacturing and the expansion of eCommerce distribution centers.

Market Indicators

• Vacancy Rate: Overall vacancy dropped to 7.31% in Q2 19, down 80 basis points from the previous year.
• YTD Net Absorption: Increased to 530,000 square feet (sf) in Q2 19, compared to 370,000 sf in Q2 18.
• Under Construction: Reduced from 2.1 million sf in Q2 18 to 855,000 sf in Q2 19.
• Average Asking Rent: Rose to $5.65 per square foot (psf) NNN, up 15% over the past 12 months.

Market Overview

The market is dominated by the warehouse sector, which accounts for 52% of total inventory. Northern Hartford, particularly Windsor, has been a hotspot for warehouse activity with over 300,000 sf of positive absorption year-to-date. Notable lease transactions include:

• Fabbrica USA leasing 135,000 sf at 1 Market Circle.
• Rolled Alloys taking an 80,000 sf building at 620 Pigeon Hill Road.
• TCI Tire Center leasing 63,500 sf at 330 Stone Road.

In Northern New Haven, warehouse availability and vacancy remain tight at 3.5% and 1.5%, respectively. Despite limited availability, a 20,000 sf lease by Rowland Technologies at 25 Research Parkway in Wallingford was executed. The area is expected to see significant new warehouse development on the former Bristol Myers-Squibb site, with a 1.0 million sf project planned.

Outlook

The outlook for the Central Connecticut industrial market is positive. Several factors contribute to this favorable climate:

• Economic Growth: Continued employment growth and strong sector performance.
• Market Forces: Limited availability, low vacancy rates, and rising rents.
• Competitive Advantage: Compared to overheated adjacent markets like Boston and Northern New Jersey, Central Connecticut offers more favorable conditions.
• New State Government: Optimism and potential for new policies that could support further growth.

The market is expected to continue its strong performance, with potential for improved conditions in the coming year.

Submarket Analysis

Key Lease Transactions (Year-to-Date 2019)

Key Sales Transactions (Q4 2018)