ATLANTA, GA (Aug. 13, 2012) – The U.S. industrial real estate market has shown noticeable signs of improvement, but a slow economic recovery means the overall market has yet to really take off.
That was one of the points made during the most recent episode of “America’s Commercial Real Estate Show,” during which show host Michael Bull (top right photo) and his guests took an enlightening look at the second-quarter performance of the industrial sector and examined its future.
Net absorption of industrial space totaled 26 million square feet nationwide in the second quarter, up from about 9 million square feet in the first three months of 2012, according to Rene Circ (middle left photo), director of research at PPR, a CoStar company. In the years leading up to the recession, the sector typically saw about 50 million square feet in positive net absorption per quarter, Circ added. Forty-two of the 54 individual industrial markets tracked by PPR posted positive net absorption in the second quarter – the highest number since the recession ended. “Although the recovery is not booming, it is at least spreading across the country,” Circ said. “It seems to be sustained.”
The national industrialvacancy rate dropped to 8.8 percent in the second quarter, continuing its gradual decline from a high of 10.3 percent in the recession, according to Circ. Moving forward, “we will definitely see positive net absorption, but [the recovery] will take time,” Circ said. “It will take more than this year and next before we get back to the levels we saw before the recession.”
While Circ offered a somewhat restrained note, two industrial landlords provided enthusiastic assessments of the sector.
“In the second quarter, we saw a dramatic increase in activity,” said Larry Callahan (middle right photo), CEO of Pattillo Industrial Real Estate. “Our marketing people are quite busy with proposals, and we’re seeing people commit to taking space. We’re also seeing improvement in the quality of deals being cut – better rates, less free rent.”
Kent Mason (lower left photo), vice president-market officer for Prologis, also said his firm is experiencing increased leasing activity and described the active tenants as “broad based.” Textile firms, food companies and equipment manufacturers all are leasing space, he said.
“2012 has been a great year for Prologis,” Mason added. “Rental rates are up. Concessions are down.”
Contact:
Stephen Ursery
Wilbert News Strategies
E-mail: sursery@wnspr.com
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