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Net Lease Sector Stable in 2018

Posted on April 20, 2018

The Net Lease Research Report by National Real Estate Investor (NREI) finds the single-tenant net lease sector will remain "in solid shape for the foreseeable future, even in what many are viewing as the late stages of the current real estate cycle." The results were compiled from 490 responses from a February survey of NREI readers; about half of the respondents held the titles of owner, partner, president, chairman, CEO or CFO. Sixty-three percent of survey participants expect cap rates for net lease properties to increase over the next 12 months. Debt and capital equity are also expected to remain as available as they have in the previous two years. The industrial and medical office sectors are predicted to drive the strongest demand over the next year. Respondents commented that there are "diamonds in the rough in secondary/tertiary markets," and the influx of German stores Lidl and Aldi will create investment opportunities. Dollar stores, largely protected from the rise of e-commerce, have "become a popular bet for some net lease investors."

Industrial Real Estate 2018: Disruptions and Structural Shifts

Posted on April 5, 2018

By: Aaron Ahlburn, JLL

Photo courtesy of Meridian Design BuildSupply chain advances and new technologies are affecting how, where and what types of industrial facilities are being built.

Much of the media coverage of industrial real estate today is overwhelmed by e-commerce oriented topics. Retailers continue to build out their delivery, fulfillment and return capabilities, in ways that are having significant impacts on the industrial supply chain and, consequently, on the location and design of buildings. E-commerce is undoubtedly driving significant change within the industrial property sector, but real estate developers and investors should also consider a variety of other disruptions and structural shifts.

These include key changes being made along the supply chain and how those changes are affecting where and how new industrial facilities are being developed today, as well as where and how they will be developed in the future.

Click here to read the full article.

CRE's Critical Contributions to US and State Economies in 2017

Posted on March 14, 2018

By: Dr. Stephen S. Fuller

Development and construction of new commercial real estate in the United States – office, industrial, warehouse and retail – generates significant economic growth at the state and national levels. This annual study, “The Economic Impacts of Commercial Real Estate,” published by the NAIOP Research Foundation, measures the contribution to GDP, salaries and wages generated and jobs supported from the development and operations of commercial real estate.

Commercial real estate development and operation of existing buildings generated the following economic benefits:

  • Supported 7.6 million American jobs in 2017 (a measure of both new and existing jobs).
  • Contributed $935.1 billion to U.S. GDP.
  • Generated $286.4 billion in salaries and wages.
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New Report: Industrial Space Demand Forecast Q1 2018

Posted on March 9, 2018

By: Dr. Joshua Harris

Industrial Demand to Remain Strong as Market Becomes Undersupplied

Demand for U.S. industrial space is expected to remain robust and steady throughout 2018, with quarterly net absorption forecast to average 55.6 million square feet. This is higher than the 44.1 million square feet of actual net absorption, on average per quarter, recorded in 2017, but lower than the 60 million square feet of quarterly net absorption forecast six months ago. According to Dr. Hany Guirguis, Manhattan College, and Dr. Joshua Harris, New York University, the predicted increase over 2017 figures is due to the faster and broader macroeconomic growth and increased consumer spending expected in 2018.

The model, run on a quarterly basis, forecasts slightly lower industrial space demand in 2019, when inflation and interest rates are expected to rise, moderating growth. U.S. gross domestic product grew by 2.6 percent in the fourth quarter of 2017, according to the advance estimate released by the U.S. Bureau of Economic Analysis, and by 2.3 percent for all of 2017. (For comparison, U.S. GDP grew by just 1.5 percent in 2016.) Sustained growth, especially with low unemployment at 4.1 percent as of January 2018, will translate into increasing demand for industrial properties as industrial users see more justification for investment and expansion of facilities.

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Industrial Sector Strong in Q4 2017 and into 2018

Posted on February 27, 2018

According to a REIS, Inc. analysis, the industrial sector experienced robust growth at the end of last year and will continue to expand during 2018. Warehouse and distribution space vacancy is at a historic low and flex/R&D space vacancy rates fell in the fourth quarter. Both subcategories had strong rent growth due to “improved trade and robust e-commerce sales.” Additionally, market indicators such as increasing e-commerce sales, manufacturing sector expansion, growing aggregate trade and added industrial-related jobs all indicate the sector is poised for further growth in 2018.

Industrial Development Goes Vertical

Posted on January 15, 2018

By: Jay Todisco

A prototype design demonstrates the viability of multistory distribution centers in land-constrained North American submarkets.

By now, all commercial real estate professionals are familiar with the growth of e-commerce and its impacts on every aspect of retail sales and logistics, from a product’s point of origin to the consumer’s doorstep. CRE professionals – and the buildings they design and develop – must respond to these quickly evolving market demands.

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Industrial Shift: The Warehouse as Profit Center

Posted on December 28, 2017

Written by Paul Briggs

With retailers pivoting to better serve customers both online and in stores, an important shift is underway in the industrial real estate sector. Warehouses, historically viewed as cost centers where goods sat waiting to be shipped to a store, are evolving into profit centers that help retailers maximize revenue and differentiate from their competition. With strategically-located fulfillment centers, retailers can get goods into the hands of impatient consumers faster. Warehouses located closer to customers also make it easier to attract workers to fill the abundant fulfillment job openings.

This shift has fueled tremendous growth in warehouse demand and rents. The resultant value creation has generated the potential for superior investment performance in comparison to other major commercial property types over the past five years. Anticipating continued strength, investors have bid cap rates down to new lows.

Click here to read the full article.

New Report: Demand for Industrial Space Will Remain Robust

Posted on August 30, 2017

By: Dr. Joshua Harris

Current Forecast: Third Quarter 2017 Report

The NAIOP Industrial Space Demand Forecast is based on a predictive model that forecasts demand for industrial space at the national level on a quarterly basis for eight consecutive quarters.

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