Your Commercial Real Estate Source in the San Francisco Bay Area
By Carrie Rossenfeld
The industrial sector nationwide is seeing declining vacancy rates and increased development, which has caused cap rates to drop since the beginning of the year, Bill Hankowsky, chairman, president and CEO of Liberty Property Trust in Malvern, PA, tells GlobeSt.com. Hankowsky will be speaking on the industrial development panel during NAIOP’s Development ’14 conference here later this month, and we spoke with him about the trends he is noticing in this realm.
“There are a handful of trends that everybody is focusing on,” says Hankowsky. “One is simply that the fundamentals of industrial space are solid and remain so. There’s a good demand for industrial space, absorption remains positive each quarter, vacancy is down nationally and rents are going up nationally.”
The second trend Hankowsky mentions is that development in the industrial arena is rising. “People need new, functional, state-of-the-art space in the size and configuration that they want it. Development is back apace across almost every market, which is both a ‘glass is half empty’ and ‘glass is half full’ situation: developers are glad to be back in the business of developing, and a number of us feel it is disciplined development, but contrarians are nervous that there will be too much development and it will undercut market strength and sector growth.”
The third trend he notes is the issue of declining cap rates, which has to deal with how in-demand this sector has become. “The fact that industrial is a very highly sought-after after class is stimulating lots of capital to the space. Cap rates are lower today than they were at the beginning of the year.”
E-commerce is another obviously huge trend, which is creating a new source of demand, says Hankowsky. “There are different logistic networks for various companies. In some cases, buildings are being constructed closer inside the metros, and there is constant thinking by our customer base about how to better store, handle and distribute their product.”
Read more of GlobeSt article here.