Commercial real estate and construction downshift, but keep moving
While a national economic slowdown and credit crunch have impacted Kentucky, too, members of the commonwealth’s commercial real estate and construction sector are maintaining a degree of optimism about the marketplace in the state That’s a reflection of the moderate stance the state kept as the real estate “bubble” inflated in the hot markets on the coasts. Additionally, the UPS Worldport operation in Louisville is a clear asset, and low interest rates continue to help bring deals to completion. The professionals The Lane Report asked to tell us about the Kentucky market do indicate that activity has slowed, but has not stopped.
“Qk4 has focused its real estate activities on projects more focused on the economic development and commercial/office marketplace. We have developed longstanding relationships with well-established clients in the Louisville metropolitan area. Most projects require a lot of lead time and planning; fortunately, they have not been affected by the current market conditions. These projects will continue to advance, but the pace to complete buildout may be slowed.”
“NUTI Builders maintains a portfolio of available retail, office and industrial properties that may be purchased or leased. Lower interest rates continue to fuel demand for real estate ownership versus leasing. Often, a business’ monthly mortgage payment can be less than a lease payment for the same space. Our willingness to sell or lease commercial space combined with high quality, visible buildings is the key to NUTI’s continued success.”
“Bowling Green/Warren County commercial real estate activity continues to surge as the local economy thrives. The county unemployment rate is still one of the lowest in the state at less than 5 percent. As the national economy continues to slow, office and retail vacancy rates have increased. The industrial market still offers limited opportunities in available space.”
“Louisville’s industrial market has performed well as large users are attracted to the UPS global hub. The office market has been active with strong recent absorption. However, the retail market is fairly flat as tenants delay expansion plans. Investment property sales have slowed as the curtailed availability of capital has sidelined many buyers.”
“Anderson Communities is involved in real estate investment and development. Commercial development is doing very well. We are currently negotiating 280,000 s.f. of commercial space with total leases valued up to $90 million. Residential new homes are slow, but rental communities are excellent. We anticipated the rental boom four years ago and actively acquired and built apartment communities. These are performing beyond our expectations.”
“The Louisville metro area provides a central location that is logistically sound for companies looking to consolidate. Unlike most of the Midwest, the Louisville market remains consistent but not overbuilt. Locally, our firm has three sites that can accommodate up to 1.6 million s.f. and is in the midst of announcing a 400,000 s.f. lease.”
“The Greater Paducah Economic Development Council has more than 525 acres available in industrial parks, mixed-use developments and privately owned land in Paducah and McCracken County. In addition, there are buildings ready for occupancy from 5,600 s.f. to more than 150,000 s.f. GPEDC provides no-cost services to assist industry in expansions or relocations.”
“Branscum Construction is seeing the commercial, industrial, health care and educational markets remain consistent and steady. Our backlog of work remains very positive and the future is promising. With roughly 75 percent of our work in Kentucky, these trends are not only in the state but also throughout the Central/Southeastern regions as well.”
“From Hollenbach-Oakley’s perspective, Class A commercial property development in the Louisville market has progressed steadily in 2008. We currently have all three phases of our Blankenbaker Station Business Park under development and are encouraged by the construction of new facilities for Norton Healthcare, Trane Corporation and the Federal Bureau of Investigation.”
“From my perspective, commercial and industrial markets in Southern Indiana and metro Louisville are relatively positive. We are fortunate to have a very strong construction market, one of the best in North America. In my general contracting and real estate development firms, our current workload and projects in the pipeline are strong. One of the negative impacts on the construction market is the rapid escalation of steel prices. My steel building supplier, NUCOR, has experienced a 50 percent increase in steel raw materials since Jan. 1.
“The forecast for the Louisville industrial market for the 2008 third and fourth quarters is cautious due to slow United States business activity. However, the Louisville economy remains steady as distribution and logistics companies continue to locate in Louisville to utilize the United Parcel Service Worldport.”