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| Michael Bull in radio booth |
ATLANTA, GA (April 22, 2013) – Buoyed by improvements in the
overall economy and the housing market, the U.S. industrial real estate sector
continued to strengthen in first-quarter 2013 and is set for a promising
future.
That was the
consensus of a panel of experts on the most recent episode of the “Commercial
Real Estate Show” radio program, hosted by Michael Bull of Bull Realty.
The episode provided an enlightening look at industrial real estate’s
performance in the first quarter. Topics included vacancy rates, investment
sales, active tenants and cap rates.
Net absorption of
industrial real estate in the 54 largest U.S. markets totaled 25 million square
feet in the first quarter, said Rene Circ, director of research for PPR,
a CoStar-owned firm. That figure, while a good bit below the 40 million square
feet of absorption typical of a pre-recession quarter, is still about three
times larger than first-quarter 2012’s total, according to Circ.
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| Rene Circ |
At the same time
that demand is growing, new supply continues to remain “exceptionally low,”
Circ said. About 13 million square feet of new industrial facilities were
delivered in the United States during the first quarter, and roughly 38 million
square feet of facilities were under construction at the end of March. Both
figures are well below historical averages, Circ noted.
Consequently, the
national vacancy rate for the industrial sector dipped to 8.2 percent in the
first quarter, a 20-basis-point decline from the preceding quarter and a
100-basis-point drop from one year earlier, Circ noted. The average rent
increased by 2.5 percent on a year-over-year basis during the quarter.
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| Jim Brice |
Overall, “we had a
really good quarter during the first three months of the year,” Circ said. The
national vacancy rate could drop to about 7.7 percent by year’s end, he added.
Much of the tenant
activity in the past two years has centered around e-commerce firms moving into
large distribution facilities, said Jim Brice, a partner with Holt
Lunsford Commercial, a Dallas-based commercial real estate firm. However,
smaller tenants – those occupying 300,000 square feet or less – have started to
return to the sector as suppliers respond to an improving housing market, he
added.
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| Rob Riner |
“Everything that goes into a house has to be in a
warehouse,” Brice said. “So as home-building increases, there’s no question
[warehousing is] going to increase as well.”
The industrial
sector has improved to the point that some spec construction is taking place
around the country, and REITs are responsible for more than 90 percent of that
activity, according to Rob Riner, a partner in the Dallas office of
Panattoni Development. “It’s easy for REITs since they don’t have to go do a
normal bank loan that other equity sources will sometimes have to do,” Riner
said.
The entire episode
on the U.S. industrial market is available for download at www.CREshow.com. The next “Commercial Real Estate
Show” will be available April 25 and will examine the U.S. office market.
For a complete copy of the company’s news release, please
contact:
Stephen Ursery
The Wilbert Group
E-mail: sursery@thewilbertgroup.com
Office: (404) 965-5026
Cell: (404) 405-2354
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