Sublease Woes Hit Industrial
Until now, office has been struggling under a huge burden of increasing sublease space, while industrial has continued to thrive. That’s changing; according to JLL, industrial sublease has risen to its highest level in two years.
JLL EVP Jeff Venghaus and SVP Jarret Venghaus (Jarret's pictured with colleagues David Buescher and Ryan Fuselier) tell us there’s now 2M SF of industrial sublease available. Subleases haven’t been prevalent for a few years, and most of the space coming back is from oilfield services/upstream companies. It’s driven by the huge number of layoffs; there have been 176,000 oilfield layoffs worldwide since the beginning of this year. They say 2015 started out with decent absorption across the industrial sector (6.2M SF was absorbed in the first half of the year), but it was mostly a carryover from 2014 momentum, and now activity is tapering. (Only 1.5M SF was absorbed in Q3, according to JLL’s new data.) 2016 is a big question mark, Jeff and Jarret tell us.
There are some bright spots, though. Jeff and his team just closed a 72k SF expansion for Mason Road Sheet Metal, bringing it to 165k SF total leased at second gen facilities at 6450 Clara and 10410 Papalote. Jeff tells us the company does sheet metal fabrication for commercial construction, and has benefited from the flurry of office and healthcare construction over the last few years. Its business has tripled over the last decade. The duo are also seeing decent demand for end-user sales of freestanding buildings. There are limited opportunities on the market, though. Jarret just repped the buyer of two such deals: Service Metal purchased a 142k SF distribution facility at 3500 Crosstimbers (pictured), and Freedom Cloud Co bought a 13k SF crane-served building at 16431 Aldine Westfield.