Bose Corp. deal is one reason industrial leasing activity is up

Bose Corp., the company well known for its sound systems, now has a home in the Louisville area.

The Framingham, Mass.-based company that designs speakers, radios, sound systems and other electronic devices, has leased 196,000 square feet at 800 Patrol Road in River Ridge Commerce Center in Southern Indiana, according to a quarterly industrial real estate report released Thursday by Louisville-based Commercial Kentucky Inc.

The Bose lease is an indicator of a busy year in the local industrial real estate market. The Commercial Kentucky report shows that industrial leasing activity is up 40 percent for 2015 over the previous year.

Total leasing activity for the second quarter exceeded 1.6 million square feet, bringing total industrial leasing activity in the Louisville market for the year to more than 2.7 million square feet.

How Bose is using the facility could not be determined by Louisville Business First as company officials have not responded to several email and phone call inquiries. Real estate sources familiar with the Bose deal told me they are not permitted to speak about the transaction.

Commercial Kentucky helped broker the deal to bring Bose to the region, but officials at the commercial real estate firm deferred all questions to Bose.

Lee Wilburn, who runs Louisville-based Crossdock Development, owns the building at 800 Patrol Road but has declined to name tenants.

But Wilburn told me in late June that the $28 million warehouse had two tenants taking up 516,000 square feet with 148,000 square feet left to lease.

Lakeland, Fla.-based Saddle Creek Corp., a company that specializes in warehousing, transportation, logistics and packaging services, is the other tenant at 800 Patrol Road.

The River Ridge business park in Jeffersonville had other leasing activity in the second quarter. It also picked up Michigan-based PTI Quality Containment Solutions LLC as a tenant. The company leased a little more than 115,000 square feet at 700 Patrol Road in River Ridge, the report said.
As Business First previously reported, PTI is opening an auto components painting facility that will employ about 100 people.

The report also noted that Derby Industries LLC was displaced after an April fire destroyed building 6 at General Electric Co.’s Appliance Park in Louisville.

Derby Industries now is subleasing 300,000 square feet in a Bullitt County warehouse once occupied by California-based textbook rental company Chegg Inc., the report said.

Chegg (NYSE: CHGG) announced it would close its Shepherdsville warehouse and move its operation out of Kentucky earlier this year.

Derby Industries has plans to lease another 150,000 square feet in that warehouse once Chegg fully vacates, according to the report.

The industrial vacancy rate in the Louisville market dropped by a mere .08 percentage point from the same period a year ago to 5.9 percent, the report said.

However, that vacancy rate is up slightly from the 5.6 percent vacancy rate recorded in the first quarter of 2015 as buildings have come online.

Necia Nast, research and marketing analyst for Commercial Kentucky, said 173,250 square feet of new speculative construction at 4310 Chefs Way and
154,394 square feet of new speculative construction at Kenwood Business Park came online during the second quarter.

“Overall negative absorption of 154,656 square feet for the quarter also contributed to the vacancy rate,” Nast said in an e-mail to Business First.

The average annual rental rate per square foot was $3.61 at the end of the second quarter, according to the report. It was $3.59 during the same period a year ago.

Commercial Kentucky’s industrial market report looks at Jefferson County industrial submarkets. Those submarkets include the central submarket that is composed of downtown Louisville and the Interstate 65 and Interstate 64 corridors; east, which includes the Jeffersontown and Middletown areas and Westport Road; south, which includes Bishop Lane and Fern Valley Road; and the west/southwest submarket, which includes Iroquois and the Riverport area. The report also captures industrial activity in Bullitt County, south of Louisville, and Clark and Floyd counties in Southern Indiana.