Industrial property appetite in the U.S.-
The commercial real estate market has seen good recovery in the multi-family, office and retail markets around the U.S. And, now we are finally hearing from industrial agents around the country that warehouse/industrial market is showing the same recovery signs.
That progress is being seen in tertiary markets around the U.S., like Bend, Oregon. Their surplus of space disappeared quickly once the demand returned. That demand has included manufacturing, distribution and warehouse spaces. Bend is basically out of industrial space with no new inventory coming on the market any time soon. That will definitely lead to rental rate increases.
In many markets, this lack of space is sparking a return to new development. That is helped along by the growth in e-commerce, causing a need to create more regional distribution centers for those goods sold online. Amazon.com is currently building large, 1 million sq. ft. distribution centers in multiple markets around the U.S. That phenomenon is also occurring at a smaller scale in middle and smaller markets.
In some markets, new development has been slowed by lack of available financing or the cost of construction and land being too high. One concern for the Bend market is the lack of supply of space will likely push rental rates even higher, which could prompt some companies to seek re-location in other areas. Yet, speculative construction will likely occur with projects looking to break ground in 2015. This new construction activity is focused on build-to-suit projects rather than speculative development.
Ultimately, the growing appetite for industrial space bodes well for owners, investors, and developers and that momentum shows no signs of slowing. Most people in the industry see a very positive scenario for the industrial market going forward into 2015 and beyond.
Source: CCIM Investment Magazine, September/October 2014