Sewell

The Lexington, Kentucky, market has experienced very little industrial development in the past 6 to 12 months, according to Philip Sewell II, president and CEO of Sewell Commercial Brokerage & Development in Lexington. “The small amount of development that has occurred is the construction or completion of owner-occupied facilities that are scattered throughout the industrial park areas in and around the city,” he says. “The major reason for the lack of construction is that demand for industrial properties has decreased.”

A few developers in Lexington are investigating offering industrial condominiums. “I feel this will be the next trend to occur in our industrial area due to lower interest rates,” says David Richardson, vice president with Sewell Commercial Brokerage & Development.

Richardson

Sewell notes two companies in the market that are planning major expansions. Semicon Associates has made an $11.9 million investment to expand its existing facility. ASC Inc. has also made an investment to expand its existing facility.

Toyoda Boshoku Corporation has announced it will establish Toyodabo Manufacturing Kentucky LLC. It is a 100 percent-owned subsidiary located in Lebanon, Kentucky, designed to manufacture molded headliners for the automobile industry.

Excaliber Trailers signed a major industrial lease early in the first quarter, according to Richardson. Excaliber, which manufactures fiberglass trailers for the transport of motorcycles, leased 25,000 square feet of new construction on Rockwell Road in Winchester, a suburb of Lexington.

The average rental rate for larger warehouse/industrial facilities varies between $3.75 and $4.50 per square foot, with pass-throughs averaging around 30 cents to 50 cents per square foot.

“Because our market is a tertiary market, the average warehouse/manufacturing tenant’s premise totals around 5,000 square feet,” Sewell notes. “Henceforth, the rental rates for smaller premises of this size average $5.50 to $6.50 per square foot. The rental rates for new construction are only slightly higher than rental rates charged for existing well-maintained facilities due to existing economic atmosphere and the structure of our market.”

The current warehouse/manufacturing vacancy rate is approximately 11 percent, which is a slight increase over the last 6-month period.

“The state of our nation’s economy has created an adverse effect on the industrial market in the immediate and surrounding areas of Lexington,” says Sewell. “In addition, the poor economic conditions have had a very negative impact on many of the smaller rural cities located throughout the eastern part of the state. As the demand for manufactured products declines, numerous small town industrial park vacancy rates have dramatically increased.”


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