Marcus & Millichap is pleased to present the opportunity to acquire the property located at 3710 Kermit Highway in Odessa, Texas. The subject property consists of approximately 27,830 square feet of warehouse space and is situated on 1.08 acres of land. The single-tenant asset features eight grade-level doors and a clear height of up to 16 feet. Recently installed in 2019, the metal roof reduces near-term maintenance expenses. For sale as vacant, the warehouse can be purchased as an investment or for owner use.
As a lease-up opportunity, investors can achieve above-market returns by taking advantage of Odessa’s historically high leasing rates. At $48.51 per square foot, the asset can be acquired at a 43 percent discount to the average market price, which trades for about $85 per square foot. With frontage along Kermit Highway, the property is strategically located on a major thoroughfare with a high daily traffic count. Situated on the corner of Kermit Highway and Mankins Avenue, the property is ideal for tenants in need of retail space.
The Odessa market contains 12.2 million square feet of industrial space, 6.5 percent of which have been delivered since 2019. Along with falling absorption rates, the new deliveries pushed up the vacancy rate from 2.1 percent in Q2 2019 to a record peak of 12.7 percent by Q3 2022. However, the vacancy rate dropped to 11.5 percent to finish the year. Going into 2023, construction activity posted 4 consecutive quarters of decline. With only about 19,000 square feet under construction, market rents and vacancies will essentially be unaffected by new supply for the foreseeable future. Despite the rise in vacancies, market rent growth remained robust, rising 5.1 percent in 2022 (CoStar). While oil and gas prices experienced a pullback during the summer of 2022, the global inflationary environment will continue to put upward pressure on both commodities, making Odessa a long-term beneficiary.
Located in West Texas, the Midland-Odessa metro is considered to be an energy capital as the Permian Basin is one of the biggest oil fields in the world and is home to some of the largest petroleum-producing companies. The metro consists of Martin, Midland, and Ector counties. The public sector is a top job provider, but the private sector is the economic driving force. The two largest cities are Midland with over 140,000 residents and Odessa with roughly 123,000 residents.
As the largest single source of oil and gas deposits in the United States, Odessa has long been known for its rich resources. New businesses have come to the city that have helped diversify the economy as well as reinforce the quality-of-life standards. Odessa proudly boasts world-class cultural and recreational facilities as well as healthcare and transportation often associated with larger cities. It also serves as the crucial midpoint between Fort Worth and El Paso. Lucrative financial incentives, site selection, logistics, qualified workforce, easy access to foreign markets, and low cost-of-living make it easy to do business (odessatex.com). Major industries include: medical, energy, distribution, manufacturing, and technology.
This information has been secured from sources we believe to be reliable, but we make no representations or warranties, express or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Marcus & Millichap is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2022 Marcus & Millichap. All rights reserved. (Activity ID: ZAD0061258)
