ATLANTA, GA (April 30, 2012) – As the economy is slowly gaining traction, so too is the U.S. industrial real estate market. In fact, the sector’s fundamentals have improved enough to catch the eye of investors growing leery of an overheated market for apartment properties.
Those were two of the points made by show host Michael Bull (top right photo) and his guests on the most recent episode of “America’s Commercial Real Estate Show,” which provided an in-depth look at the industrial market’s performance in first-quarter 2012.
The R&D/flex component of the market experienced a 20-basis-point decline in its vacancy rate during the first quarter, while the warehouse/distribution subsector’s vacancy rate dipped by 10 basis points, said Ryan Severino (middle left photo), a senior economist for Reis.
Investment sales in the sector dipped slightly in the first quarter when compared with the last three months of last year, but the transaction volume was 21 percent higher than in the same period in 2011, Severino added. 2012’s sales volume should end up bigger than 2011’s, and sales will likely continue to grow in the years ahead, he said.
Bull echoed Severino’s assessment. “I think it’s going to be a big year for investment sales in the industrial market,” he said.
“It was another quarter of what I would characterize as modest improvement in the industrial sector …,” Severino concluded. “I say that we should be cautiously optimistic about the sector [in the year ahead].”
A lack of new supply in recent years has the sector set for significant rent increases in the future, said Mitch Roschelle (middle right photo), who heads PricewaterhouseCoopers’ Real Estate Advisory Practice. Also driving rent growth is tenants’ growing reluctance to move and disrupt the efficient operations they’ve established, he added.
To move “and run the risk [of] this finely tuned machine that’s been productive and profitable taking a hiccup … it doesn’t make sense, and so [tenants would] rather stay put,” Roschelle said.
While fundamentals continue to improve, the industrial sector is not yet a market that favors landlords, said Greg Herren (lower left photo), COO of Seefried Industrial Properties. However, “as they enter the market, I don’t think tenants should expect grossly discounted deals,” he said.
Albuquerque, N.M.; Denver; and Salt Lake City are three industrial markets experiencing notable recoveries, while Dallas; Nashville, Tenn.; and Orlando, Fla., are three that continue to struggle, according to Roschelle.
The next “Commercial Real Estate Show” will be available May 3 and will provide an update on the investment market for U.S. medical properties.
Contact:
Stephen Ursery
Wilbert News Strategies
Office: (404) 965-5026
Cell: (404) 405-2354
