NORTHEAST SNAPSHOT, DECEMBER 2004
Vermont Industrial Market
Vermonts industrial market has shown strong signs of
growth in 2004. The growth rate the amount of newly
constructed/redeveloped industrial space in square feet
for 2004 is 3.1 percent, up from 2.1 percent in 2003 and a
record low of 0.5 percent in 2002.
Continuous improvement over the last 2 years indicates
economic recovery as measured by business expansion, job growth
and stabilization, according to Doug Nedde, principal
broker for Redstone, a full-service commercial real estate
firm in Burlington, Vermont.
The vacancy rate, at 6.6 percent, is indicative of the stable
Vermont industrial market. The current number is substantially
lower than the 10 percent vacancy rate of 2001 and 2002.
The increased demand for industrial space is further illustrated
by the swell in leasing activity. In 2002, only 29 lease transactions
were completed, representing 245,000 square feet. That number
doubled to 58 transactions in 2003. In the first 5 months
of 2004, 40 leases were brokered for a total of 268,000 square
feet. A vast majority of the leases so far completed in 2004
are for smaller space. Of the 40 leases completed, 37
were for spaces of 15,000 square feet or less, which is a
reflection of the size of Vermonts industrial market
as compared to larger, urban markets, says Nedde. Rental
rates for high-quality properties in Vermont range from $6
to $7. For average industrial space, rates range from $4.50
to $6; for below-average properties prices range from $2.50
There are few businesses requiring manufacturing and
high-tech space. There is more of a demand for warehousing
and distribution, Nedde notes.
The majority of industrial development is occurring in Williston,
where Redstone Construction has just completed a 38,000-square-foot
facility for FedEx Ground/Home Delivery, which has a planned
expansion of up to 59,000 square feet. In Bradford, REM Development
Company has two 12,000-square-foot buildings and two 15,000-square-foot
buildings ready for occupancy along Interstate 91 in the Upper
According to Nedde, the Chittenden County submarket, which
includes Greater Burlington, is an area to watch for future
industrial development because companies such as IBM and Fletcher
Allen Health Care have created a strong economic base. Another
area poised to experience growth in industrial development
and leasing activity is the Upper Valley, near White River
Junction, Vermont, and Hanover, New Hampshire.
The industrial market in Vermont is steadily recovering from
the record lows experienced in 2002 and improving economic
conditions are allowing developers to take more risks. The
market should continue this positive trend as the economy
strengthens and businesses continue to experience growth.
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