Albemarle’s industrial age
In Albemarle County, industrial space, not office or retail, “has been the bright spot in commercial real estate” in terms of demand, says Lisa Sturtevant, research leader at Bright MLS Inc. “All of a sudden, there’s been a big rush for industrial space,” she says, but adds, “Good luck in finding it right now.”
Albemarle County’s master plan supports efforts to shape the region into a hub for life sciences and biotech businesses. The region already has 67 such companies, and at the mixed-use Albemarle Business Campus, an 80,000-square-foot biotech space, is on the books as “shovel-ready.”
However, the Charlottesville area “is incredibly undersupplied by light industrial property,” says John Pritzlaff IV of Cushman & Wakefield | Thalhimer, and data from CoStar Group Inc. bears that out.
In the first quarter of the year, CoStar reported only 17,888 square feet of new industrial space delivered in the region and an industrial vacancy rate of only 1.1%. Not surprisingly, given such a tight market, the price of industrial space has rocketed. A year ago, full-service rents averaged $4.95 a square foot, Sturtevant notes. This year, that rate has almost doubled, to $8.14 a square foot.
Faced with those figures, last fall, Charlottesville-based sugar manufacturer Bonumose Inc. opted to renovate the 36,000-square-foot former State Farm building in Albemarle’s Pantops region for its planned expansion, funded in part by The Hershey Co., rather than seek out a brand-new space.
Despite the premium rate that industrial space now commands, CoStar reports that the region had just 111,000 square feet of industrial space under construction in the first quarter of 2022.
On the retail front, not much news has been good news. “During the pandemic, everyone worried about retail, but it was resilient,” Sturtevant says, partly because the federal government’s Paycheck Protection Program helped businesses “keep the lights on” in 2020 and 2021. The neighborhood market has been the strongest retail sector, she reports, citing the region’s retail vacancy rate of 3.7% in the first quarter of 2022, compared with a state average of 4.5%, as reported by CoStar.
About 200,000 square feet of new retail space was in the pipeline during the first quarter, with rental rates static at about $20 per square foot across the region, though that’s significantly better than the state average rate of about $16.
“Overall, the commercial real estate market did better than expected,” Sturtevant says.
Read more about Charlottesville’s Class A office space boom.