SIOR held their Fall Conference in Los Angeles recently. One panel made a lasting impression. They pointed out the spreads and prices between A and B warehouses are the widest it’s ever been. While no one spelled out the specific reason, a combination of low interest rates, Quantitative Easing, flight to quality, and the Port/Gateway story has revived the investment market for A Industrial. Cap rates of 5% are the current norm for A property in the best industrial markets. Lower grade (non-institutional) sell at 200 to 300 basis points higher. Returns climb in secondary markets. Why aren’t more investors buying up the sub-institutional real estate where returns are greater? It will happen soon and this will be a turning point for dormant industrial markets around the country.

Continue reading “When Do Investors Rediscover “B” Industrial?”