The industrial market for the first half of 2017 is still pretty hot! We are seeing prices of existing buildings and lease rates increase due to positive absorption and low inventory. More than half of our leases and sales are to businesses that are new to the market. Our existing construction is attracting more industrial prospects to our market. Current inventory of buildings that have 28 foot ceiling height is low, which is the requirement for many users at this time.
State legislature recently made changes which permits buyers indemnification of environmental conditions through a Certificate of Environmental Liability Release (CELR) from KDHE. A Phase I must be obtained which shows a recognizable environmental issue then a Phase II must be obtained and application made to the State for review. The buyer must be under contract but cannot own the property prior to the CELR being provided.
In the last half of 2017, we will commence discussions with the City of Wichita for new tax abatement programs to motivate new speculative building. Tenants are not willing to wait for build-to-suits, thus having inventory ready to lease is vital to our market. Overall, inventory to buy or lease will remain low as people are expanding and creating new businesses. The market has been and continues to be very active.