it doesn’t take a rocket
scientist to appreciate that
companies are being very
Still, observers expect that the industrial
market will continue to improve in 2013 as
the US economy too grows moderately.
“Moderate growth works for industrial,”
First Industrial’s Yap says. “We’re encour-
aged when we look across the nation, with
the leasing activity and the range of custom-
ers in our markets.”
And considering that industrial leases
roll over on a five-year basis, 2013 will see
the turnover of leases made during the
rocky times of 2008, which Yap sees as pro-
viding scope for rent growth. Improvement
in the housing sector is another potential
boon, creating employment and increased
consumer demand and, therefore, demand
for warehouse distribution space.
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square feet of industrial has been added to
the overall US inventory, according to
Cushman & Wakefield, including over 15
million feet built on a spec basis, already
outpacing 2011’s total addition of 29. 6 million square feet.
Dieter sees the addition of speculative
space as a sign of market optimism and
confidence. And JLL’s Meyer says that there
is no tendency to overbuild, given that
more than 65% of the construction activity
is on build-to-suit projects that already have
a committed tenant.
Other market metrics provide a positive
market picture overall, although it’s a different story from one market and one
region to another. Vacancy rates in the sector sat at 9% nationally at the end of the
third quarter, Cassidy Turley reports, edging down 10 basis points from the prior
quarter and 20 bps from Q3 2011. Asking
rents, however, have edged down to $5.02
per foot in the third quarter, a difference of
two cents from Q2 and nine cents from the
Dieter notes that in the current uncer-
tain environment, companies have been
very conservative in terms of their expan-
sion plans. “Instead of expanding, they’ve
improved their efficiencies, which makes
all the sense in the world,” he explains.
“When you take into account the global
geopolitical issues and the fragility of the
overall global marketplace, it doesn’t take a
rocket scientist to appreciate that compa-
nies are being very cautious.”
These global issues led to a slowdown in
the US economy and manufacturing out-
put, over the summer, which tends to
impact demand for industrial space, as well.
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