Week of August 14, 2020

U.S. Industrial Broker Sentiment

Once a month we discuss general U.S. industrial trends and share observations. Overall, experienced SIOR brokers in major markets are reporting very solid business conditions. On the set questions I have the following to report:

Rents and Sale Prices are generally increasing. Cap Rate are trending down. Cap Rates in Inland Empire are reaching sub 4% and still declining. Not very much sublease space. Rental abatements are moderate. For example, 2 to 3 months free on a 5-year deal. Less rent abatement on newer buildings. Construction costs appear to be staying constant or slightly decreasing.

Signs in all major markets with ecommerce expansion. Amazon, of course. Home Depot, Loews, Kroger and many 3PLs are all taking new ecommerce space.

For more broker specific topics, fee income is stable. Most brokers report staying busy. A few are trying video tours to replace in-person. To make up for fewer networking events, some chapters are hosting frequent video calls with both leading speakers and intra-chapter discussions. One broker held a drive-in open house with a 30-second individual elevator pitch, box lunch to go, and a car wash on exit.

As for local Gardena activity, off-market sales continue to major investors. If there was a lull during the Spring lock down, activity has strongly returned. Seeing tight conditions for most sizes. Almost nothing for sale, institutional quality, or not. Good dock access remains a basic requirement for almost all tenants. For buildings with large yards, service companies and contractors will make use of the land for parking and outside storage.