The total inventory in the Dayton market expanded to 103.98 million square feet, up from 103.7 million square feet last quarter, with the addition of 281,482 square feet of new supply.
“This increase, though modest, reflects the ongoing need for industrial space, driven by key occupiers,” Colliers said.
Credit: Jim Noelker
Credit: Jim Noelker
With a decline in vacancy rates to 3.5%, compared to 4.2% in the second quarter and 5.5% in the third quarter of 2023, “the Dayton industrial market is experiencing a strong and sustained period of demand, setting a positive tone for the remainder of the year,” the firm said.
Even with 15% fewer tenants in the market compared to the third quarter last year, net absorption for the most recent quarter surged to 1.1 million square feet, a reversal from the negative absorption seen over the previous two quarters.
Net absorption measures changes in occupied space, taking into consideration vacated space and newly built space.
Higher net absorption represents more space being leased than vacated. Negative absorption means more space is vacated.
In the second quarter of 2024, the market saw -468,400 square feet of negative absorption, while the third quarter of 2023 recorded -463,800 square feet, highlighting the turnaround in market dynamics seen in the most recent quarter.
The jump in absorption is largely tied to key tenants such as Sierra Nevada Corp. on Old Springfield Road and ESI Electrical Contractors on Sand Lake Road, who all took substantial space, Colliers said.
Sierra Nevada recently cut the ribbon on its second large aviation maintenance hangar near the Dayton International Airport, while breaking ground the same day for planned third and fourth hangars, driven largely by a significant Air Force contract.
Additionally, completed expansions from Yaskawa and Innomark added to the positive absorption figures, the Colliers report said.
Among the biggest deals of the quarter: An undisclosed buyer bought property at 115-125 W. National Road, in a $1.77 million deal, Colliers said. Leinster Property Solutions bought property at 4825 Gateway Circle for $1.4 million.
Norm Khoury, a Collier’s senior vice president, said for a market the size of Dayton, the area has been fortunate. Over the past decade or so, the industrial market has been strong, with a vacancy rate that may be considered normal.
Industrial activity has stretched from Sidney down to Austin Landing and beyond. Cincinnati’s metro area has also grown north into the southern Dayton market.
Colliers expects the next quarter to be good, as well.
Khoury sees “near-shoring” — placing work closer rather than in a more distant nation — distribution growth, workforce strength, location and other factors working for the area market. A lowering of interest rates will also be helpful.
“It’s transportation, it’s labor, it’s also education,” the training of workers who can fill the jobs, Khoury said, listing factors that bring manufacturing and distribution companies to the area.
“The fourth thing I can say is there is also tax-abated land that is available in Dayton that is not available anywhere else,” he added, especially near the Dayton International Airport.
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