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| Michael Bull |
ATLANTA, GA– As 2012 begins to draw to a close, the U.S.
industrial real estate market’s fundamentals continue to slowly improve while
investors continue to show considerable interest in the sector.
The most recent episode of “America’s Commercial Real Estate
Show” provided an enlightening update on the sector. Show host Michael Bull
and his guests discussed vacancy rates, absorption, investor demand and new
construction.
The national industrial vacancy rate fell about 20 basis
points to 8.7 percent during third-quarter 2012, according to Rene Circ,
director of research at PPR, a CoStar company.
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| Rene Circ |
National net absorption was a positive 15 million square
feet during the third quarter. “We’re climbing,” Circ said. “We’re just
climbing very slowly.”
Investment sales in the sector, on the other hand, arebrisk,
totaling about $4.8 billion in the third quarter, Circ said. “The industrial
investor market didn’t get the election memo,” he said. “It did not slow. In
fact, it’s back to normal, if you consider the years 2005 and 2006 as normal.”
Buyers have long been fixated on core, Class-A properties in
gateway markets, but now they’re interested in the same kinds of facilities in
secondary markets - such as Indianapolis, central Pennsylvania and Phoenix –
where the cap rates aren’t as compressed, according to Circ.
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| Sim Doughtie |
“It’s still about buying the best stuff, but it’s no longer
just about buying it in the best markets,” Circ said. “In some cases, the
secondary markets will do just fine.”
The development of distribution centers for e-commerce “is a
new and big trend,” said Sim Doughtie, president of King Industrial
Realty Inc. Best Buy, Home Depot and Bed Bath & Beyond are some of the
retailers that have recently announced plans to build more e-commerce distribution
centers, he added.
The overwhelming majority of the new construction taking
place in the sector consists of build-to-suit properties, noted Todd Carter,
regional vice president of DCT Industrial. “There’s simply not a lot of spec
development out there,” he said.
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| Todd Carter |
“The rents haven’t really justified spec development just
yet,” added John Petricola, regional director of Rockefeller Group
Development Corp. “Rents have been relatively flat for a number of years. If
the rents aren’t there, disciplined developers won’t build [spec].”
The development of “green” industrial properties that can
achieve LEED or some other type of environmental certification is another
prevalent trend in the sector, guests noted. “As a landlord, I wouldn’t want to
own a building 10 years from now that’s not LEED-certified because I wouldn’t
want to try and sell it,” Petricola said. “I don’t believe the market will be
there.”
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| John Petricola |
The entire “U.S. Industrial Market Update” episode is
available for download at www.CREshow.com.
The next “America’s Commercial Real Estate Show” will be
available on Nov. 22 and will provide an in-depth examination of the
environmental issues confronting real estate transactions and provide
strategies to successfully deal with them.
Contact:
Stephen Ursery
Wilbert Public Relations
E-mail: sursery@wnspr.com
Office: (404) 965-5026
Cell: (404) 405-2354
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