Industrial-Today’s Darling – 2022 Q1 Review

The industrial real estate market in Western Nevada County (namely Grass Valley and Nevada City) is tighter than it has ever been in my 25 years of real estate work here.  Our industrial vacancy rate now sits at less than 1.5% and rents are steadily increasing. The pandemic has led to a greatly increased money supply creating huge increases in e-commerce and related manufacturing, warehousing and distribution needs, all of which require industrial space.  Even Amazon has established a relatively large distribution warehouse in Grass Valley, and sub- $100/sf light industrial values have now grown to a median price of over $130/sf.

I predict values and rents will continue to increase until such time as: 1) new supply comes on line; 2) a large user outgrows the area and leaves town; or 3) a major recession sets in.  While adding new supply is the only positive of the three, it is also the most unlikely to occur due to the fact that the market has run out of properly zoned land for industrial construction.  The City of Grass Valley has available land (for example in the Whispering Pines Business Park), that could and should be re-zoned to light industrial, but they have thus far not proactively pursued this. Unfortunately, this will increase the odds of items 2) and 3) above occurring.


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