2021 Remains an Unbalanced Industrial Market

2021 Remains an Unbalanced Industrial Market

The industrial property business has grown from a real estate niche serving mostly large corporations and owner/users to a favored investment of large institutions. The rise coincided with the great manufacturing upheaval of shuttered plants as companies shifted production offshore. Goods return in containerized shipments and begat the new industry of logistics. The result was increased liquidity of both goods and capital. A situation that is ideal for warehouse development and investment. Today’s industrial marketplace is made up of global and national 3pls, shipping companies, e-commerce, and on the capital side, Industrial REITS, large investment funds, and a handful of developers. The Covid Supply Chain phenomena and an increase in tariffs has compounded an already unbalanced space market to acute levels
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Return to Corporate Real Estate

Return to Corporate Real Estate

There has been a resurgence of demand from Corporate Real Estate. Once, the most important sector of the industrial real estate business, corporate influence has waned in comparison to investor/developers. The fade of corporates is a long-term trend starting when manufacturing moved off shore in the 1980s. Since the Great Financial Crisis, Capital’s influence in industrial real estate has only become more pronounced as investors search for yield. Tenants are the crucial for cash flow, but where it counts the most, in the ownership rankings and at the negotiation table, Capital is the market leader.
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Commentary on Industrial Markets

Commentary on Industrial Markets

Week of June 25 – Need For Space

The industrial market during the Covid-19 period, now edging back to normality, is a lesson on disruption. The most visible example are container ships backed into the sea and unable to unload goods because there is not enough dock space available at the ports. It is the same at warehouses and container yards: too many products and not enough space.
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Why Is Industrial the Hot Investment

Why Is Industrial the Hot Investment

As 2020 comes to an end, Industrial Buildings continue to be good investments. With annual appreciation at 6% and current cap rates at 5%, Buyers are getting 11% annual returns and greater on an “all-cash” basis. These calculations reflect market conditions and not based on finding a “good deal”. With interest rates at 3% or lower, there is strong leverage boosting cash-on-cash returns to 10% with conservative financing. Levered returns increase to 15% (cash flow + appreciation). If you can find property for sale, not always that simple, conditions are very supportive.

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New Asian Cities

New Asian Cities

Through my attendance at MIT’s World Real Estate Forum, I was introduced to new research that is collected in the book entitled, Toward Urban Economic Vibrancy, Patterns and Practice in Asia’s New Cities, Edited by Siqi Zheng and Zhengzhen Tan. The several papers that make up the book include sections on finance, structure, Public Private Partnership, design, success measurements, industrial policy, location, and case studies.
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