More industrial properties available in active market

By: Sarah Terry-Cobo//The Journal Record//December 26, 2017

ROC Service Co. at 2432 E. Highway 66 in El Reno.  (Photo by Brent Fuchs)

OKLAHOMA CITY – The industrial real estate market is still active, but there are more properties available now than last December, said Mark Patton, an industrial broker with Price Edwards & Co.

He said he hasn’t seen any dramatic changes for clients, and a recent lease renewal at an industrial property in El Reno is a good sign about the sector’s health overall. J. David Chapman, a finance professor who specializes in real estate at the University of Central Oklahoma, said it’s a smart idea for an oil-field services company to hang on to specialized buildings.

ROC Service Co. recently renewed a lease at a 72,000-square-foot building in El Reno near Highway 66. The Bridgeport, Texas-based oil-field services provider has been in the space for about three years.

“Just the fact that they renewed is a good start,” Patton said.

He said many clients are cautious and are using a wait-and-see approach when it comes to leasing industrial buildings. That is indicative of the industry at large, he said.

There are more properties available now than this time in 2016, Patton said. Industrial real estate prices haven’t fluctuated much in the last year. Flexible space vacancy rates rose from nearly 12 percent in 2016 to about 14.5 percent in 2017, according to a midyear market report published on Price Edwards & Co.’s website. The oil-field downturn noticeably affected small businesses with flexible space.

Some industrial properties are still sitting on the market, available, for longer than in previous years, said Patton. Those are mostly buildings customized for specific applications, like ones with large cranes, used for loading heavy equipment, or those that can produce high air conditioning loads.

“Those are very specialized, so I can’t lease it to a plumber,” Patton said.

Chapman said he agreed with Patton that it’s a good start that an oil-field services company has re-signed its lease. He said oil-field companies are continuing to keep industrial properties, even if they’re not using them currently.

“They are going to need to store things and fix things,” Chapman said. “These (relatively small facilities) don’t make a big difference in their balance sheet, and it helps keep them in business if they need it in the future.”

If an oil-field service company does give up its lease on an industrial building with cranes and other specialized equipment, it’s expensive to add it later and it’s hard to get the value from the upgrades, he said.

More industrial properties available in active market | The Journal Record