So, one-third of the way through 2018, how is the industrial market? We have had some big announcements and some significant construction projects. Amazon has announced that Oklahoma City will be the site of a 2.5 million square foot Fulfillment Center. A Fulfillment Center is an Amazon warehouse, in this case, four stories tall, warehousing items which are directly shipped to Amazon customers. A project of this size reinforces the notion that OKC has come of age. In addition to this is the construction of a 1.0 million square foot warehouse addition to the Hobby Lobby campus.
This will bring the total Hobby Lobby warehouse and manufacturing space to over 9 million square feet. Perhaps the most amazing aspect is that Hobby Lobby supplies high-volume retail stores in almost the entire continental U.S. from this one location. Oklahoma City is their only distribution hub. In the world of logistics, this is a monumental achievement. The story for the rest of the industrial market is mixed.
CoStar is now the only relevant commercial listing service actively monitoring the Oklahoma City industrial market so we are quoting their numbers. The total OKC metro industrial market is just over 126 million square feet. There is an actual reported vacancy of 4.0%, a tight market below the national average of 5%. Adding in the amount of space available for sublease brings the total to 7.1%. “Net Absorption” is the ratio of all the space that has been occupied versus that which has become available through new construction or the vacation of existing space in a certain time frame.
“Net Positive Absorption” means that more space is being newly occupied than is being vacated. The OKC industrial market is in net positive absorption year-to-date but the amount is only 35,000 square feet which would annualize to 105,000 square feet. A great year would end up with 300,000 to 500,000 square feet of net positive absorption. Overall, 2018 has been a little quiet so far.