(Slide courtesy of NAIOP)
On Wednesday, July 12 NAIOP Northern Virginia held its mid-year forecast for the office, multifamily, industrial, and retail markets. The area-wide office vacancy rate stood at a staggering 16%, a major source of headaches for local governments, while industrial and multifamily vacancy rates were at 10-year lows. Retail vacancies were creeping upwards, around 5% for Northern Virginia.
According to one presenter, 5% of the entire industrial/flex market in Northern Virginia is occupied by Amazon alone. Moreover, online sales only account for a fraction of total retail sales, with lots of room to grow, and industrial zones are in limited supply. That means rent for industrial space will skyrocket unless more is added. One presenter related an experience he had with a prospective investor for an apartment complex, who wanted to know how close the nearest Amazon warehouse is to the property and took that into consideration when making his decision.
Industrial zones are critical to density. The more densely populated an area becomes, the more important warehouse proximity becomes. The more valuable and desirable that place becomes. Cities are experiencing traffic problems due to the rise of same day delivery services and limited amount of space from which those services operate. The same can be said of self-storage, where not long ago self-storage was seen as a NIMBY use. Nowadays, you can’t add density without a place for all of the new residents to store their stuff.