Sep 21, 2021 3 min read

The pandemic has changed how and where we do business. Social distancing and stay-at-home orders have accelerated online shopping trends. This has challenged traditional brick and mortar retailers to adapt to new delivery options for their customers and reduced the need for physical retail space. Traditional office space and office parks are also confronting new leasing realities as many companies and their employees have shifted to full-time remote work or hybrid work models which lessen the need for large office footprints. And while recent reports of increased office space demand are encouraging, the true long-term effects of these new labor and consumer dynamics are unclear and ever evolving.

However, despite the uncertainty in some commercial real estate markets, one sector has remained strong and even growing – the industrial/flex market. To be clear, these sites are not the massive 100-acre steel mill campuses we once knew stretching across the horizon. These are smaller, flexible spaces hosting online fulfillment facilities, advanced manufacturing, and logistics companies and the space required by these industries has remained in high demand during the past 18 months. According to a recent report by Newmark, a global leader in real estate services, industrial leasing during the past quarter was strong with over 101.7 million square feet of industrial space leased in the United States and, more impressively, an additional 432.4 million square feet currently under construction. Newmark also found that industrial vacancy during the past quarter was nearing historic lows. Industrial real estate is in demand and for our county, this is an issue.

In Washington County we have 14.2 million square feet of industrial space with Class A space making up only 23% of the market share. Our Class A vacancy rate for this space is generally low and in line with the national average. The remaining 77% is either Class B or C space, which is considered less desirable due to limited investment potential or the inability to convert the space to meet the needs of modern industrial users. We have seen higher-than-average vacancies in these two classes. Our inventory for Class A space is severely limited and much of the remaining vacant industrial sites are functionally obsolete. This issue is further compounded by the fact that companies want to locate in Washington County. Last year alone, over half the property inquiries the county received were for industrial sites, which in many cases meant they were seeking pad-ready or existing Class A buildings, which we lack.

Fortunately, we have several industrial/flex properties coming online, such as the Brockway Glass redevelopment, Hardy World 70 project, and Fort Cherry Development District. These, along with the remaining pad ready sites in Alta Vista Business Park and the continued development of Starpointe Business Park are all promising, but we will still need additional sites.

Washington County’s future economic plans must include the development of new industrial sites, especially ones that are pad ready and flexible enough to accommodate modern industrial users. Our future will include industry, but only if we invest in sites that are heading where the market is directing us.

Jeff Kotula is president of the Washington County Chamber of Commerce & Tourism Promotion Agency.