Reichle Klein Group’s 2024 Mid-Year Industrial Market Overview

While still well below the high level of activity registered over the prior five years, the Toledo region industrial space market held steady, even improved by some metrics, in the first half of 2024. The Reichle Klein Group mid-year survey of the market found that the overall market vacancy rate increased modestly from 3.47% at the end of 2023 to 3.71% at June of 2024. Meanwhile, the average asking rental rate, net absorption and the level of new construction all increased over the first six months of 2024.

A total of 195,097 square feet of space was absorbed in the first half of 2024, well off the pace of the past five plus years, but a marked improvement from the 35,735 square feet absorbed in the second half of 2023. Transaction activity in the first half of the year as well as projected deliveries of built-to-suit spaces suggests that the second half of the year will see an even larger increase in positive net absorption in the second half of the year.

The amount of space under construction remains at an elevated level, though it will quickly drop down to a fraction in the second half given scheduled deliveries and the slowed pace of new project launches in the pipeline. One project of note that is seemingly moving forward is a new built-to-suit warehouse facility for Amazon in Perrysburg Township near its existing facility. True spec construction has largely come to a halt in the face of higher interest rates, higher construction costs and economic uncertainty.

The same combination of higher interest rates, higher construction costs and economic uncertainty have also led to slower user activity generally. Automotive industry users, data centers and First Solar related users – all of which have some unique drivers – have been active.

First Solar itself has been the most active player in the market for the past several years and accounts for much of the new space that has been added to the market. The lion’s share of the space currently under construction is a soon-to-be delivered First Solar facility in Perrysburg Township. Their most recent move was the January 2024 acquisition of the new, but never occupied 1.2 million square foot former Peloton facility in Troy Township. First Solar says that it intends to use the building for logistics and distribution. As First Solar consolidates into the newly acquired building, they will apparently be vacating leased warehouse spaces scattered throughout the market creating some vacancies as a result.