Dayton’s industrial real estate market is tight.
It’s hot, but not very sexy.
That’s how Ric Moody, broker/owner of Dayton Commercial Realty, describes the current marketplace for industrial real estate.
The market for industrial real estate is hot now because the recession that started in 2008 is finally starting to loosen its grip on the economy and small businesses are starting to grow again, he says.
“[Small businesses] were the first segment that truly came back out of the recession,” says Moody. “Because those were the people that were working in smaller spaces and had already downsized, or were working out of their garage or home or something.”
And because banks are more willing to lend money those small business owners are now looking to buy industrial space instead of leasing that same space, says Moody. But the demand for industrial space is outstripping the supply. “The tightest market up here currently is industrial real estate,” Moody says. “There’s not a lot available.”
And it doesn’t look like there will be any more industrial real estate available anytime in the near future, he says. “As much as the banks want to lend money nobody’s truly lending money on speculative office space or retail or industrial,” Moody says.
Banks are still relatively conservative and won’t lend money to developers of industrial buildings without having tenants preleased, he says.
“Industrial real estate is not sexy real estate, so therefore you don’t see someone go, ‘Hey, I’m going to go build a 20,000-square-foot multitenant industrial building because that’s the hot thing to do,’” Moody says. “Therefore we just don’t have the vacancy like we used to five years ago in industrial.”
Another reason more industrial projects aren’t being developed is because it’s cheaper to buy an existing building than to build a new building, says Moody. “You can buy an existing building for probably 60 cents on the dollar compared to what a new building costs because of the values that went down during the recession,” he says.
That value for existing buildings applies to all commercial real estate, including retail, office or industrial, says Moody. “So there’s great deals in previously owned commercial real estate on all segments.”
Dayton’s commercial real estate market has been improving for about 18 consecutive months, he says. The real estate auction market has also been improving, says Moody, who is also an auctioneer.
But the real estate auction market has seen a shift in the past five years, another sign the economy is improving, he says. “Five years ago the real estate auction market was probably 90 percent forced by the banks and 10 percent by the owners,” Moody says. Now it’s probably 95 percent owners and 5 percent banks that are making the decision to conduct an auction, he says.
Regardless of whether someone wants to buy, sell, lease or conduct an auction, Moody says Dayton Commercial Realty can help.
“Our specialty is we can help buyers or sellers, we can help landlords or prospective tenants find space, sell space, lease space, and as an auctioneer we can help dispose of people’s real estate, or really any other products that they own,” Moody says. “We can sell anything.”