Coleman Group - 5th Annual Commercial Real Estate Market Study

Coleman Group’s 5th Annual Commercial Real Estate Market Study Shows The Central Business District Continues to Strengthen Feb 9th, 2006

The 2006 Coleman Group Market Study, an annual examination of commercial real estate in Lexington, Kentucky, reflects two Lexington market realities; the continuing strength of the local economy, and the tightening availability of office space in downtown and industrial locations.

The Central Business District Market Study indicated that there was a significant decrease of 2.84 % in the vacancy rate year-over-year among the 2,341,312 square feet in the 30 downtown office buildings surveyed. Sixty percent of office availability can be found in three assets, making the remaining CBD market very strong. With the overall market positioned for continued absorption, there’s the possibility for real rent growth as vacancy levels fall below the 10% level.

The Suburban Survey is much different. The year-end review disclosed an 11.75 % vacancy rate among the 2,564,488 square feet in the 70 suburban office buildings surveyed, which included a regular vacancy rate of 10.99 % and a sublease availability of 0.76 %. This indicates a total suburban vacancy increase of 1.69 % from the 10.06 % compiled in the fourth quarter of 2005.

Continued development and planned expansion in the office sector is increasing pressure on Suburban vacancy levels. With anticipated new office development projects happening throughout Lexington, specifically in Coldstream, Hamburg, and Beaumont, it is safe to assume that vacancy levels will continue to increase resulting in even more pressure on rental rates and market concessions.

Like the Central Business District, the Industrial Warehouse/Flex Market Study also showed a decrease in vacancy. Of the total 6,142,825 square feet surveyed, there is 1,269,641 square feet of availability, which represents a decrease of 3.44 % from the fourth quarter of 2005. This sector continues to improve with an increase in owner occupied purchases of select assets.

The Office Condo Survey revealed 65 office condos already built totaling 1,506,871 square feet. At the end of the calendar year, 426,513 square feet was vacant indicating a 28.30% vacancy rate which is a decrease of 7.71% since last year. There are also twelve office condo buildings in the planning stages in this study totaling 303,464 square feet of which 277,464 square feet will be available.

If you would like to receive a copy of the Lexington Market Studies, please go to Coleman Group’s website at www.ColemanGroup.net and use the Request Market Studies link.