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SVN® Energy Series: Industrial Development Soars With Surging Battery Production and Growing Demand for Energy Storage Solutions

By Cameron Williams, Director of Research, SVN International Corp.

An abundance of industrial development is being driven by the burgeoning battery production sector where over the last decade a surge in demand for energy storage solutions has emerged. Beyond EV battery production, these facilities are focusing on battery cells that are meant for storing energy produced by wind, solar, and water. As North America’s battery manufacturing capacity is projected to increase nearly twentyfold by 2030, the ripple effects are palpable in the commercial real estate market, with industrial spaces being rapidly repurposed to accommodate the needs of this high-growth sector. This transformation signifies not just a technological revolution but a pivotal economic shift, as the U.S. positions itself at the forefront of the global energy transition.


SVN® Energy Series: Solar Remains A Bright Spot In Industrial

By Cameron Williams, Director of Research, SVN International Corp.

In the ever-evolving world of commercial real estate, solar energy is a current stand out. As of 2022, the U.S. boasts over $35B in private solar investments and employs a solar workforce exceeding 260k — five times that of the coal industry. The Solar Energy Industries Assoc. highlights an impressive 24% average annual growth in the past decade, culminating in a staggering 155 GW of installed capacity, sufficient to energize 27 million homes. But it’s not just about sustainability; it’s a beacon of new economic opportunity. With declining installation costs and advancements ranging from high-efficiency cells to innovative solar shingles, the impact on commercial properties and industrial production facilities is undeniable.


New Industrial Construction: High Demand Outweighing Economic Headwinds

By Cameron Williams, Director of Research, SVN International Corp.

Industrial rent is still experiencing double digit growth nationally and low end vacancy as the demand for space continues into 2023. Certain markets are particularly hot. The Southeast has had several major seaport expansions recently, contributing to an increased need and record expansion along with the Southwest corridor as a potential alternative to comparatively high rents on the Western Coast.

Top Commercial Real Estate Brand SVN® Strengthens Product Councils with New Co-Chairs

Boston, MA — (April 4, 2023) — SVN International Corp. (SVN), a renowned commercial real estate brand with a global presence, is pleased to announce the appointment of two new Co-Chairs who will help lead their Industrial and Land Product Councils. SVN Product Councils are strategic groups within SVN that focus on specific areas of commercial real estate, and they serve as a platform for industry leaders to share knowledge and collaborate on innovative solutions.

Augie Schmidt of SVN | Saunders Ralston Dantzler in Lakeland, FL has been appointed as SVN’s new Industrial Product Council Co-Chair. Augie will co-lead the Industrial Product Council alongside Curt Arthur of SVN | Commercial Advisors based in Salem, OR. Augie specializes in industrial properties and is skilled at tailoring custom strategic plans to advise his clients through the acquisition, disposition, and leasing of industrial commercial real estate. Previously, Augie was the Director of Research at SVN | Saunders Ralston Dantzler, where he oversaw a team of research analysts that evaluated commercial assets to maximize clients’ returns.

“I’m incredibly excited to work alongside Curt Arthur to help lead one of the most exciting and rapidly growing asset classes in commercial real estate,” said Augie. “When you combine the SVN brand with a strong group of individuals that are committed to excellence and serving their clients at the highest level, it makes for a real opportunity in front of us.”

Juve Pinedo of SVN | Vanguard in Santa Ana, CA has been appointed as the new Product Council Co-Chairperson of SVN’s Land & Development Product Council. Juve brings extensive experience in brokering land zoned for various uses across multiple states. Some of the uses include commercial, residential, industrial, mineral resources, equine and agricultural. Recently, Juve brokered a 825-acre land sale with subsurface mineral resource value and a 1000-acre operating hard rock quarry; one of California’s largest quarries ever to be brokered. Over the last few years Juve has earned and maintained the designation of Certified Land Specialist, the only one in California.

“I will strive to be a valuable resource to new and seasoned SVN Advisors who wish to add or increase Land transactions to their business model,” said Juve.

SVN’s newly appointed Product Council Co-Chairs bring extensive knowledge, experience and expertise to the organization’s Product Council groups. SVN is thrilled to have these new leaders on board and looks forward to the significant contributions they will bring to the SVN network.

About SVN®
The SVN® organization is a globally recognized commercial real estate entity united by a shared vision of creating value with clients, colleagues, and our communities. The SVN® brand is comprised of over 2,000 Advisors and staff in more than 200 offices across the globe in six countries. Our brand pillars represent the transparency, innovation, and inclusivity that enables all our Advisors to collaborate with the entire real estate industry on behalf of our clients. SVN’s unique Shared Value Network® is just one of the many ways that SVN Advisors create amazing value with our clients, colleagues, and communities.  For more information, visit www.svn.com.

All SVN offices are independently owned and operated. To learn more about becoming an SVN commercial real estate business owner, visit http://www.svn.com/franchise/.

Looking to the Future: The Disruption of COVID-19 and the Transition into the Next-Normal

Exactly one year ago, eight governors across the US took the initial move to close bars and restaurants, and the Dow Jones posted its largest one-day drop ever, finishing down a record 2,997 points. The world as we knew it was hitting the proverbial fan. New incoming information —none of which was encouraging — came across our screens at a frantic pace, causing our stomachs and portfolios to drop in tandem. 

With a full year now passed by in the COVID economy, the universe of uncertainty has thankfully compressed. While it was not an advanced degree that any of us had applied for, the pandemic has imparted a lifetime of lessons, offering clear clues about the future of commercial space demand and the ways we as humans interact with the built environment.   

Macroeconomy

Starting first with the economy as a whole, I know we have all become a bit numb to sideways numbers during the past year, but to dig ourselves out of this hole, it is important to understand just how deep we are. Early last year, while we were all still finishing our champagne and settling in after the holiday season, the Congressional Budget Office released its estimates of 2020 economic growth, serving as a reliable benchmark of where the economy would have stood without the pandemic. Actual output last year fell short of the CBO’s early 2020 forecast by $1.2 Trillion Dollars, good for an average loss of $3,560.06 for every American.

More workers filed for initial unemployment claims in the first nine weeks of this crisis than during the entirety of the 2007-2009 recession, and the unemployment rate hit a stratospheric high of 14.8% last April. Through the most recent Jobs report, it looks like we are once again starting to see some positive momentum toward an eventual recovery. The civilian unemployment rate ticked down 6.2% through February as the economy added back 379,000 jobs. We remain a long way to go, but between vaccination rollout and the onset of warmer weather, the W-shaped recession we have seen so far should have enough fuel in the tank to prevent another near-term downturn.   

Multifamily

An often-peddled refrain during the early days of the pandemic was that the multifamily, and apartment sector as a whole, would maintain its stability by the simple fact that people will always need somewhere to live. If anything, the same optimists argued that the resiliency of cashflows could actually improve as renters were spending more time in their homes due to involuntary quarantines. With a year of data available now supplanting conjecture, we find that residential rentals have indeed performed up to expectations. No, conditions have not been ideal, and distress is not too hard to find, especially in gateway markets. However, compared to worst-case scenarios, the apartment sector has lived up to its reliable bedrock status. According to the National Multifamily Housing Council’s rent tracker, which follows the performance of more than 11 million professionally managed apartments, 93.5% of renter households paid rent in February— only a 1.6% drop off from the same month last year. These data may, however, likely understate some sector-level underperformance, as they do not include vacant units or self-managed “mom-and-pop” properties. According to Freddie Mac’s latest forbearance report, we know that small balance originations, which tend to cater to the “mom-and-pop” investor class, make up 75% of loans in forbearance.1 

The CDC’s eviction moratorium remains a pressing challenge for the industry and an impediment to its return to pre-pandemic health. The market for rental housing is a circular flowing ecosystem between lenders, investors, and renters. There is no net-positive corrective policy that achieves more benefit than harm by breaking the symbiotic process, much as the moratoriums have.  The NMHC offers that moratoriums “fail in their purpose of addressing renters’ underlying financial distress” and “jeopardize the stability of housing providers and the broader housing market.” Despite two different federal judges ruling against the CDC policy in the past month, the ban remains in place. There are, however, green shoots forming, which could signal a return to more normal conditions in the near future. At the end of this month, the moratorium is scheduled to expire— a deadline that we should accept with a coarse-grained piece of salt. Nevertheless, the appropriations bill passed at the end of the year, and the American Rescue Plan of 2021 passed last week collectively set aside $46.6B for rental assistance programs. A CPPB analysis of Census Bureau survey data finds that roughly one-in-five renter households are behind on rent— a crisis that should see meaningful relief as funds are released.2

The permanence of COVID-induced migration will be a hot-button topic as more jabs land in arms. Taken together, the trifecta of New York, California, and Illinois, the states that are home to the three largest US cities, collectively lost more than 275,000 residents in 2020. The human density that has historically attracted demand toward superstar cities has had the complete opposite effect in the past year. Without accessible cultural amenities or the need to be in an office Monday through Friday, a significant share of the workforce became untethered to their home cities and have made their way toward the exit. According to CoStar, New York, LA, San Francisco, Chicago, Seattle, Boston, and Washington DC are all among the list of cities to post year-over-year declines in asking rents through Q4 2020. 

While the outgoing flow of residents has been lumped together as one homogenous cohort, there appear to be at least two major groups leaving. The first group of COVID-nomads is defined by those that already had eyes towards more affordable and spacious housing options over the next couple of years. Given the urban context in 2020 and the attractively low borrowing costs, many of these renters simply said, “Hey, why not now?” and moved up their progression timeline. These are the types of households that are more likely to be buying baby carriages before the next time they step on a subway, and their transition out of major metros is probabilistically permanent. The second group contains those who are transient, often early into their careers, working remotely, and still seeking the lifestyle amenities they had enjoyed pre-covid. Watching how this group behaves as large companies start calling workers back into the Office and cities look more like their pre-pandemic selves will be telling.   

Office

Today, there is no property type subject to more speculation than the Office.

Unlike multifamily, Retail, and industrial, where COVID has mostly magnified pre-existing trends, the pandemic has led to rampant reimagination in the office sector. Our understanding of how both firms and workers interact with physical office space to optimize productivity is permanently changed. According to the Census Bureau’s Household Pulse Survey, an estimated 38% of working American adults have transitioned to remote work in some capacity due to COVID. The share is even higher in large office markets like New York and Los Angeles, rising to 47% and 45%, respectively. En Masse, The American Workforce traded morning commutes for Zoom links, an illuminating natural experiment that has challenged the Office sector’s core-assumptions. When PwC launched its remote work survey in June, 44% of employers thought that the transition to remote work has allowed their teams to be more productive than before the pandemic.3 When the same employers were polled again in December, the share climbed to 52%, indicating that not only has a consensus emerged, but that efficiency has improved following the initial learning curve. The realization that companies can not only maintain but actually improve performance through a remote infrastructure is a ‘no turning back,’ Pandora’s box type of moment. It should therefore come as no surprise that, according to the same survey, only 21% Of US executives think that a full five days in the office every single week is the best setup to maintain a strong corporate culture. 

The likelihood that total office space demand will have a smaller footprint in the post-pandemic world is a consideration that we cannot afford to take lightly. A Fitch research report released just last week estimates that an additional 1.5 work-from-home days per worker would lead to a 15% reduction in property-level net cash flow— a development that would meaningfully recalibrate our understanding of risk and value. Given the long-dated lease structure common throughout the sector, it will take a few years for emerging preferences to filter through fully. Moody’s Analytics REIS forecasts that vacancy rates are likely to rise to near-record levels through 2023 before beginning a gradual recovery in 2024. 

Of course, not all metro-level office markets will move as one. Some of the migratory demand that is leaving large cities and contributing to localized weakness ahead will also lead to strength in other markets, particularly in major Metro adjacent suburbs. According to Real Capital Analytics, Central Business District-located Office properties posted a 0.2% decline in value for the year. On the other hand, suburban located office assets saw valuations continuing to grow at a healthy 6.6%.

Industrial

The industrial sector remained the undisputed top performer of commercial real estate through an otherwise challenging 2020. Secular tailwinds, such as e-commerce adoption, grew from a healthy gust to a sustained hurricane force. Over the past decade, online retail sales have increased by an average of 15.2% annually. Brick and mortar retail sales over the same period have only grown by an average of 3.4% per year. The share of total Retail sales satisfied by online orders has steadily risen, entering 2020 At 11.3%. In the second quarter, as nonessential retailers across the country closed their doors, this share skyrocketed above 16%. While the share has reverted down to 14%, the pandemic has permanently transitioned some in-person retailing onto online platforms. Online grocery delivery services, a concept that had faced greater consumer resistance than other E-platforms before 2020, stood uniquely positioned to benefit from the demands of a lockdown economy. According to grocery e-commerce specialist Mercatus and research firm Incisiv Projects, online grocers accounted for 3.4% of all US grocer sales in 2019, before swelling to 10.2% in 2020.4 Further, the same study estimates that online groceries will satisfy 21.5% of domestic demand by 2025. Surging demand for E-grocers also means an increased demand for distribution and fulfillment facilities in close proximity to consumers. In the most recent Emerging Trends in Real Estate report, fulfillment facilities ranked as the subsector with the best prospects for future investment and development opportunities. 

Another source of new industrial demand can be traced to the supply chain disruptions experienced this last year. The pandemic exposed critical sensitivities, and e-commerce retailers are looking to better safeguard their ability to match inventory supply with order demand. Doing so has meant a transition away from “just in time” distribution models in favor of “just in case” models instead. The latter requires excess warehousing space to stock contingent inventory. 

Retail

There was no shortage of pessimism surrounding the retail sector heading into 2020, even before there was a pandemic to contend with. Pre-pandemic, Retail was in the midst of what was widely expected to be a 10-year shakeout and a painful rightsizing process. As noted in the 2021 ULI / PwC Emerging Trends Report, the US retail sector had three major headwinds going into last year: the US has more retail square footage per capita than any other country in the world, an increasing share of core-retail activity has transitioned online, and domestic consumers have experienced a long-term stagnation of wages. Concepts that were on the path towards obsolescence, with hopes of maybe squeezing out a few more years of economic solvency, are those that have struggled the most during COVID— none more so than department store retailers.

While the outgoing companies will argue otherwise, a case can be made that 2020’s pain will help the retail sector pave a quicker path back to recovery. The sector has gone from Darwinism to ‘Darwinism on steroids.’ Though, before we can imagine a radical future where physical retail demand sits just a bit higher than supply, the existing glut of obsolescent space needs to find adaptive reuse. After all, not every struggling mall will be turned into an Amazon distribution center. Lifestyle centers, where fitness centers, housing units, and mixed Retail are blended together, are one of the leading concepts to aid in re-positioning and re-absorption. According to Real Capital Analytics, Lifestyle Centers have an average price per square foot that is almost three times higher than average assessed for Mall assets, reflecting some of the value that can be recaptured through re-positioning.  

As Retail continues to match physical footprints with the forward-looking consumer behavior, the short-term reversion back to normalcy will at least provide some much-needed relief. Cabin-fever-consumers armed with unspent stimulus checks should give Retailers a potent shot in the arm, even if the upside effects are only temporary.

Outlook

Whether it be the public health front, the economy, commercial real estate, our lives in general, or how all the above are inexorably linked, 2021 has all the makings of a year defined by recovery. The Federal government’s push to have vaccine availability for every US adult by May 1st means that herd immunity is not too far behind. 

Between the safe resumption of our pre-pandemic lives, the commitment by the Federal Reserve to maintain low interest rates even as inflation pressures rise, and the unprecedented level of stimulus in the hands of consumers, a perfect storm of economic momentum is brewing just offshore. If anything, there is increasing concern that the economy has the potential to overheat in the year ahead as too much fuel enters the fire all at once. According to the February and March iterations of the Wall Street Journal’s Economic Forecasting Survey, a majority of leading economists believe that this year will have more upside risk than downside risk, and more than 80% think that the newly passed stimulus will generate inflation higher than the Fed’s 2% target.

In many ways, we as an industry remain in wait-and-see mode, with questions over a return to the office timing and rightsizing are still swirling overhead. Although, overly conservative and reactive strategies rarely make winning formulas in Real Estate. Now is the time for landlords to engage tenants and companies to engage employees about emerging preferences, then execute on a strategy. If 2020 has taught us nothing else, it’s that the pace of change can accelerate quickly, and falling behind the curve of innovation is a costly and often un-correctable mistake.

 

Endnotes
1. https://mf.freddiemac.com/docs/January_forbearance_report.pdf
2. https://www.cbpp.org/research/housing/housing-assistance-in-american-rescue-plan-act-will-prevent-millions-of-evictions
3. https://www.pwc.com/us/en/library/covid-19/us-remote-work-survey.html
4. https://www.supermarketnews.com/online-retail/online-grocery-more-double-market-share-2025

St. Louis, MO | 2016 Top #CRE Markets to Watch: Industrial

SVNIC’s 2016 Market Outlook Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2016. Today we are delving into the 2016 Top Industrial Markets to Watch. Not the largest or the most actively contested markets, the 2016 Industrial Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Industrial Market to Watch: St. Louis, MO

St. Louis - Top Industrial Markets to WatchThe St. Louis economy has experienced strong growth since the recession and now features a 5.2% unemployment rate as of January ‘16 with modest job growth of 1.2% annualized. The diverse economic base includes manufacturing of food and agricultural products that are relatively immune to cyclical forces and thus stabilize the St. Louis industrial space market. Still, the key industrial sector of Manufacturing is losing jobs at a 1.3% annualized pace while Trade, Transportation, and Utilities grows at a nearly flat rate of 0.3% annualized. Overall, the stable nature of the industries operating in St. Louis, many with corporate HQs, and its strong river, rail, and air linkages should allow its industrial market to remain healthy in 2016 and beyond.

Stay Updated…

Over the next few weeks, the SVN Blog will be featuring posts that will focus on each of the top markets to watch for industrial, multifamily, office, and retail properties. SVN Advisors from selected top markets have provided their industry expertise regarding what to look out for in their specific market in the coming months. Don’t miss out on these important insights – subscribe to the SVN Blog on the right side of the blog homepage.

To read more on other top industrial markets, download the full version of the 2016 Industrial Market Outlook report here.

2016 Industrial Market Outlook

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Seattle, WA | 2016 Top #CRE Markets to Watch: Industrial

SVNIC’s 2016 Market Outlook Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2016. Today we are delving into the 2016 Top Industrial Markets to Watch. Not the largest or the most actively contested markets, the 2016 Industrial Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Industrial Market to Watch: Seattle, WA

Seattle - Top Industrial Market to WatchSeattle has experienced significant job growth since the recession and continues to add jobs at an annualized rate of 3.0%, keeping unemployment stable at 5.6% as of January ‘16, according to the BLS. As Seattle hosts major West Coast ports, a major airport, and excellent rail linkages, trade and distribution activities dominate the industrial real estate market. Employment in the Trade, Transportation, and Utilities sector is growing at an annualized rate of 4.2%, making up for losses in the Manufacturing sector that is contracting at an annualized rate of –0.9%. Overall, the Puget Sound ports and infrastructure should drive robust demand for industrial real estate as more and more ship traffic is routed up north from congested Long Beach, California.

Advisor Insights: SVN | Raven

SVN’s Seattle-based Advisors at SVN | Raven have some industrial market highlights to share. Here’s what to look out for in the Seattle industrial market in 2016:

  • Tear down old outdated commercial space for new modern distribution centers
  • HUB/community space on outdated office/industrial flex
  • Owner-user acquisition buildings for assemblage for larger projects

Stay Updated…

Over the next few weeks, the SVN Blog will be featuring posts that will focus on each of the top markets to watch for industrial, multifamily, office, and retail properties. SVN Advisors from selected top markets have provided their industry expertise regarding what to look out for in their specific market in the coming months. Don’t miss out on these important insights – subscribe to the SVN Blog on the right side of the blog homepage.

To read more on other top industrial markets, download the full version of the 2016 Industrial Market Outlook report here.

2016 Industrial Market Outlook

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Pittsburgh, PA | 2016 Top #CRE Markets to Watch: Industrial

SVNIC’s 2016 Market Outlook Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2016. Today we are delving into the 2016 Top Industrial Markets to Watch. Not the largest or the most actively contested markets, the 2016 Industrial Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Industrial Market to Watch: Pittsburgh, PA

Pittsburgh - top industrial markets to watchThe Pittsburgh economy has more or less stabilized after the recession and massive losses to its manufacturing and steel production base. Today the unemployment rate sits at 5.5% as of January ‘16 but job creation is effectively flat at a literal 0.0% rate of growth. The industrial real estate market of Pittsburgh is highly influenced by oil and gas production as well as the steel industry, both of which have potential to see long-term losses. Key industrial sectors are losing jobs, including Manufacturing and Trade, Transportation, and Utilities which are declining at annualized rates of –3.4% and –0.4%, respectively. Thankfully, Pittsburgh is transforming itself into a more research and high-tech focused economy which should grow overall jobs and ultimately benefit the industrial sector. Further, this trend should cause more vacant industrial buildings to be repurposed and redeveloped, helping industrial landlords overall.

Advisor Insights: SVN | Three Rivers Commercial Advisors

SVN’s Pittsburgh-based Advisors at SVN | Three Rivers Commercial Advisors have some industrial market highlights to share. Here’s what to look out for in the Pittsburgh industrial market in 2016:

  • Vacancy rate is 6.2% and expected to stay the same or slight decrease
  • Rental Rate average is $5.74 / SF which is trending upwards and expected to stay the same or increase
  • Positive absorption expected for both flex and warehouse space

Stay Updated…

Over the next few weeks, the SVN Blog will be featuring posts that will focus on each of the top markets to watch for industrial, multifamily, office, and retail properties. SVN Advisors from selected top markets have provided their industry expertise regarding what to look out for in their specific market in the coming months. Don’t miss out on these important insights – subscribe to the SVN Blog on the right side of the blog homepage.

To read more on other top industrial markets, download the full version of the 2016 Industrial Market Outlook report here.

2016 Industrial Market Outlook

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Memphis, TN | 2016 Top #CRE Markets to Watch: Industrial

SVNIC’s 2016 Market Outlook Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2016. Today we are delving into the 2016 Top Industrial Markets to Watch. Not the largest or the most actively contested markets, the 2016 Industrial Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Industrial Market to Watch: Memphis, TN

Memphis - top industrial market to watchThe Memphis economy has been slowly growing and recovering since the recession and stands today with 5.6% unemployment as of January ‘16, with modest annualized job gains of 1.7%, according to the Bureau of Labor Statistics. Its strongest industrial segment and in fact strongest employment segment overall is Trade, Transport, and Utilities, which is expanding at an annualized rate of 4.2%. Manufacturing is also adding jobs at 0.7%. Given that Memphis is located in the approximate population weighted center of the country, it is an ideal location to serve for e-commerce and other direct to consumer distribution businesses. Thus, the Memphis industrial market may be one of the largest benefactors of the rise of online shopping and will likely continue to expand in 2016 and beyond.

Stay Updated…

Over the next few weeks, the SVN Blog will be featuring posts that will focus on each of the top markets to watch for industrial, multifamily, office, and retail properties. SVN Advisors from selected top markets have provided their industry expertise regarding what to look out for in their specific market in the coming months. Don’t miss out on these important insights – subscribe to the SVN Blog on the right side of the blog homepage.

To read more on other top industrial markets, download the full version of the 2016 Industrial Market Outlook report here.

2016 Industrial Market Outlook

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Los Angeles, CA | 2016 Top #CRE Markets to Watch: Industrial

SVNIC’s 2016 Market Outlook Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2016. Today we are delving into the 2016 Top Industrial Markets to Watch. Not the largest or the most actively contested markets, the 2016 Industrial Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Industrial Market to Watch: Los Angeles, CA

Los Angeles - top industrial market to watchLos Angeles is one of the largest, most dynamic cities in the United States and its economy has fully recovered, with a normalized level of unemployment at 5.5% as of January ‘16 and annualized total employment growth of 2.3%, according to the Bureau of Labor Statistics. Its industrial space market is one of the best performing in the nation due to the growth in container and freight traffic from the port as well as inbound air cargo from Asia. The Trade, Transportation, and Utilities sector is growing at an annualized rate of 1.7%, meaning that further growth and expansion is possible. Of course, the reliance on trade could cause a contraction in the industrial sector with global pressures, but this is unlikely as much of the trade and distribution are import goods that will benefit from a strong US dollar.

Stay Updated…

Over the next few weeks, the SVN Blog will be featuring posts that will focus on each of the top markets to watch for industrial, multifamily, office, and retail properties. SVN Advisors from selected top markets have provided their industry expertise regarding what to look out for in their specific market in the coming months. Don’t miss out on these important insights – subscribe to the SVN Blog on the right side of the blog homepage.

To read more on other top industrial markets, download the full version of the 2016 Industrial Market Outlook report here.

2016 Industrial Market Outlook

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Knoxville, TN | 2016 Top #CRE Markets to Watch: Industrial

SVNIC’s 2016 Market Outlook Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2016. Today we are delving into the 2016 Top Industrial Markets to Watch. Not the largest or the most actively contested markets, the 2016 Industrial Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Industrial Market to Watch: Knoxville, TN

Knoxville - top industrial market to watchThe Knoxville economy is extremely steady given its diverse economic base and thus experienced relatively low effects of the recession. The city now has a 4.5% unemployment rate as of January ‘16, with overall employment growing at an annualized rate of 2.5%, according to the Bureau of Labor Statistics. The industrial sectors of Knoxville are all showing marked strength, including Manufacturing and Trade, Transport, and Utilities growing at annualized rates of 4.5% and 4.1%, respectively. Additionally, the Mining, Logging, and Construction sector is growing at a rapid 10.2% annualized rate, further fueling the market. The mix of defense, research, and industrial manufacturers gives Knoxville strong power to grow its industrial real estate in 2016 and beyond.

Stay Updated…

Over the next few weeks, the SVN Blog will be featuring posts that will focus on each of the top markets to watch for industrial, multifamily, office, and retail properties. SVN Advisors from selected top markets have provided their industry expertise regarding what to look out for in their specific market in the coming months. Don’t miss out on these important insights – subscribe to the SVN Blog on the right side of the blog homepage.

To read more on other top industrial markets, download the full version of the 2016 Industrial Market Outlook report here.

2016 Industrial Market Outlook

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Greenville-Spartanburg, SC | 2016 Top #CRE Markets to Watch: Industrial

SVNIC’s 2016 Market Outlook Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2016. Today we are delving into the 2016 Top Industrial Markets to Watch. Not the largest or the most actively contested markets, the 2016 Industrial Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Industrial Market to Watch: Greenville-Spartanburg

Greenville-Spartanburg - top industrial market to watchThe Greenville-Spartanburg region has experienced significant gains in its labor force, and overall employment is growing at a 2.6% annualized rate with unemployment holding steady at 4.9%, according to the Bureau of Labor Statistics. Key industrial sectors of Trade, Transport, and Utilities and Manufacturing are growing at annualized rates of 2.6% and 1.3%, respectively, setting up the industrial market for gains in 2016 and beyond. As South Carolina is well located for distribution in the Southeast, connected to ports, and unfriendly to labor unions, it is likely to continue to see expansion in its industrial sectors including those of Greenville-Spartanburg. Low cost of living and operating costs also serve to boost overall business development.

Stay Updated…

Over the next few weeks, the SVN Blog will be featuring posts that will focus on each of the top markets to watch for industrial, multifamily, office, and retail properties. SVN Advisors from selected top markets have provided their industry expertise regarding what to look out for in their specific market in the coming months. Don’t miss out on these important insights – subscribe to the SVN Blog on the right side of the blog homepage.

To read more on other top industrial markets, download the full version of the 2016 Industrial Market Outlook report here.

2016 Industrial Market Outlook

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Dallas, TX | 2016 Top #CRE Markets to Watch: Industrial

SVNIC’s 2016 Market Outlook Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2016. Today we are delving into the 2016 Top Industrial Markets to Watch. Not the largest or the most actively contested markets, the 2016 Industrial Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Industrial Market to Watch: Dallas, TX

Dallas - top industrial market to watchThe Dallas economy remains one of the strongest of the major metros in the nation with unemployment at 3.8% as of January ‘16 and steadily rising total employment at a 3.4% annualized rate, according to the Bureau of Labor Statistics. The fastest growing sector of employment in Dallas is an industrial space using Trade, Transport, and Utilities, which is growing at an annualized rate of 5.2%. This is the sector, where most of the 2016 and beyond gains in the industrial space market will be generated. Dallas has unparalleled airport and rail access making it an ideal business and distribution hub. In fact, the area surrounding the DFW airport is best poised to expand. Manufacturing is the weakest sector declining at a –1.6% annualized rate. This sector touches oil and gas production and exploration, and is thus most at risk for declines in 2016 and beyond.

Stay Updated…

Over the next few weeks, the SVN Blog will be featuring posts that will focus on each of the top markets to watch for industrial, multifamily, office, and retail properties. SVN Advisors from selected top markets have provided their industry expertise regarding what to look out for in their specific market in the coming months. Don’t miss out on these important insights – subscribe to the SVN Blog on the right side of the blog homepage.

To read more on other top industrial markets, download the full version of the 2016 Industrial Market Outlook report here.

2016 Industrial Market Outlook

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Albuquerque, NM | 2016 Top #CRE Markets to Watch: Industrial

SVNIC’s 2016 Market Outlook Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2016. Today we are delving into the 2016 Top Industrial Markets to Watch. Not the largest or the most actively contested markets, the 2016 Industrial Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Industrial Market to Watch: Albuquerque, NM

Albuquerque top industrial marketAlbuquerque’s overall economy has remained fairly stable with a slowly falling, above national average level of unemployment at 5.8% as of January ‘16, according to the Bureau of Labor Statistics. Key industrial sectors have been losing employees and thus may threaten to soften the industrial space market; these include Manufacturing and Trade, Transportation, and Utilities which are contracting at –2.5% and –0.9% annualized rates, respectively. As much of the economic and industrial base of Albuquerque centers on high tech, research, defense, and other manufacturing, the industrial sector should remain very stable on a relative basis. Given low levels of new supply, growth in fundamentals could also occur in 2016 as the market is not over-supplied.

Stay Updated…

Over the next few weeks, the SVN Blog will be featuring posts that will focus on each of the top markets to watch for industrial, multifamily, office, and retail properties. SVN Advisors from selected top markets have provided their industry expertise regarding what to look out for in their specific market in the coming months. Don’t miss out on these important insights – subscribe to the SVN Blog on the right side of the blog homepage.

To read more on other top industrial markets, download the full version of the 2016 Industrial Market Outlook report here.

2016 Industrial Market Outlook

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Seattle, WA | 2015 Top #CRE Markets to Watch: Industrial

Sperry Van Ness International Corporation’s (SVNIC) 2015 Market Update Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2015. Today we are delving into the 2015 Top Industrial Markets to Watch. Not the largest or the most actively contested markets, the 2015 Industrial Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Industrial Market to Watch: Seattle, WA

Seattle: 2015 Industrial Markets to WatchSeattle’s industrial vacancy rate fell to 4% in the first quarter of 2015, down more than 100 basis points from a year earlier. High occupancy rates, impressive rent growth trends, and investors’ favorable assessment of the general market opportunity are prompting significant new development. More than 4 million square feet was under construction in late 2014, representing more than 3% of the market’s current industrial inventory.

With one of the fastest growing urban cores and most highly educated populations, Seattle’s economic and investment outlook position the Puget Sound region as a contender for gateway market status. In the Urban Land Institute’s latest Emerging Trends Report, Seattle ranks in the top ten markets nationally for its attractiveness as a target for investment across all property types. It ranked fourth nationally for development and redevelopment opportunities, behind only Houston, Dallas, and San Jose and ahead of all of the coastal gateways. For industrial investment specifically, Seattle ranked second in the nation, 88% of investors assigned Seattle’s industrial sector a buy or hold rating while only 12% reported a sell recommendation.

To read more on Seattle and other top industrial markets, download the full version of the 2015 Industrial Market Update report here.

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It’s a different world out there.

It requires a different kind of commercial real estate firm working on your behalf in order to be successful. The Lipsey Company has ranked the Sperry Van Ness® organization as one of the most recognized commercial real estate brands in the US for a reason—we know how to deliver a certainty of execution for our clients. Sperry Van Ness International Corporation is one of the largest commercial real estate franchisors with more than 180 locations in 200 markets.

Portland, OR | 2015 Top #CRE Markets to Watch: Industrial

Sperry Van Ness International Corporation’s (SVNIC) 2015 Market Update Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2015. Today we are delving into the 2015 Top Industrial Markets to Watch. Not the largest or the most actively contested markets, the 2015 Industrial Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Industrial Market to Watch: Portland, OR

Portland: 2015 Industrial Markets to WatchPortland’s industrial vacancy rate dipped below 6% in the first quarter of 2015, adding the region to the ranks of the tightest industrial markets in the nation. Rent gains across industrial subtypes have accelerated in kind and, in 2014 and the first quarter of 2015, were on par with higher profile markets including San Jose. The strong local economy and online commerce trends are behind the healthy absorption of warehouse, distribution, and fulfillment spaces. But the concentration of tech activity and the market’s relatively low costs have also made Portland an attractive option for data centers. As compared to markets with comparable occupancy and rent growth rates, investors will find relatively good values in Portland. The average cap rate for sales and refinancing activity was 6.2% in 2014, nearly 100 basis points higher than in the dominant Northern California and Southern California markets and 70 basis points lower than Seattle. Diverging from the positive outlook for the area’s overall industrial market, the Port of Portland faces serious challenges. In spite of the longshoremen’s new contract, the departure of Hanjin and Hapag-Lloyd — which together account for nearly all of the port’s container traffic — will be difficult to overcome.

To read more on Portland and other top industrial markets, download the full version of the 2015 Industrial Market Update report here.

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It’s a different world out there.

It requires a different kind of commercial real estate firm working on your behalf in order to be successful. The Lipsey Company has ranked the Sperry Van Ness® organization as one of the most recognized commercial real estate brands in the US for a reason—we know how to deliver a certainty of execution for our clients. Sperry Van Ness International Corporation is one of the largest commercial real estate franchisors with more than 180 locations in 200 markets.

Northern New Jersey | 2015 Top #CRE Markets to Watch: Industrial

Sperry Van Ness International Corporation’s (SVNIC) 2015 Market Update Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2015. Today we are delving into the 2015 Top Industrial Markets to Watch. Not the largest or the most actively contested markets, the 2015 Industrial Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Industrial Market to Watch: Northern New Jersey

Northern New Jersey: 2015 Industrial Markets to WatchFollowing more than a year of sluggish rent gains and relatively weak absorption, Northern New Jersey’s industrial market appears poised for growth. That sentiment may be shared across the wide range investors who ranked North Jersey fifth in the nation for industrial investment prospects. In the Urban Land Institute’s 2015 Emerging Trends Report, nearly two-thirds of respondents assigned a buy rating to the North Jersey industrial market. Only 7% gave a sell rating.

Major projects underway will bolster the competitiveness of the area’s industrial assets, including interchange and bridge infrastructure projects. The Port Authority of New York and New Jersey is investing in massive infrastructure improvements to the Port Newark Container Terminal. Those efforts will increase capacity and processing time per truck. Additionally, the Bayonne Bridge is being raised more than 60 feet at a cost of more than $1.3 billion in order to accommodate the post-Panamax ships that are expected to pass through the Panama Canal once widening is complete in 2016.

Among new sources of demand for space, tighter markets in New York City are generating spillovers into the Garden State. As gentrification marches through the Outer Boroughs, some of the city’s industrial tenants may look to the Meadowlands and other Northern New Jersey markets for cheaper alternatives and larger floor plates. With little in the way of new construction, the market’s tighter occupancy outlook should support more consistent rent and property income growth.

To read more on Northern New Jersey and other top industrial markets, download the full version of the 2015 Industrial Market Update report here.

industrial_thumbnail

It’s a different world out there.

It requires a different kind of commercial real estate firm working on your behalf in order to be successful. The Lipsey Company has ranked the Sperry Van Ness® organization as one of the most recognized commercial real estate brands in the US for a reason—we know how to deliver a certainty of execution for our clients. Sperry Van Ness International Corporation is one of the largest commercial real estate franchisors with more than 180 locations in 200 markets.

Minneapolis – St. Paul, MN | 2015 Top #CRE Markets to Watch: Industrial

Sperry Van Ness International Corporation’s (SVNIC) 2015 Market Update Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2015. Today we are delving into the 2015 Top Industrial Markets to Watch. Not the largest or the most actively contested markets, the 2015 Industrial Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Industrial Market to Watch: Minneapolis – St. Paul, MN

Minneapolis: 2015 Industrial Markets to WatchMinneapolis in 2015 is a clear buy in the investor calculus. According to the Urban Land Institute’s 2015 Emerging Trends Report surveys, the Twin Cities ranks fourth in the nation for the strength of the industrial investment opportunity, behind the Southern California agglomeration of the Inland Empire, Los Angeles, and Orange County. Two-thirds of survey respondents ranked Minneapolis-St. Paul’s industrial sector as a buy this year. Another 28% rated the market a hold. Less than 6% gave the market a sell rating; only Orange County and Raleigh-Durham had a more favorable assessment. Investors can still find less relative bargains in this less aggressively priced market. Cap rates in the Minneapolis region averaging 6.8% during 2014, 100 to 150 basis points higher than other top-ranked markets.

The Twin Cities has long served as a vital economic hub for the Upper Midwest region. Distribution centers, logistics facilities, and data centers — some with elite Tier III certification, including the new CenturyLink MP2 facility — are popping up throughout the metropolitan area to match strengthening absorption. More than a million square feet of new space entered the inventory in early 2015, including nearly 500,000 square feet for furniture retailer Room & Board. The vacancy rate declined to below 7% in any case. More than 4 million square feet of projects are currently in the pipeline, representing roughly 3% of the existing inventory. While the bulk of that space is speculative, the market’s strong underlying growth drivers are expected to support healthy absorption.

To read more on Minneapolis – St. Paul and other top industrial markets, download the full version of the 2015 Industrial Market Update report here.

industrial_thumbnail

It’s a different world out there.

It requires a different kind of commercial real estate firm working on your behalf in order to be successful. The Lipsey Company has ranked the Sperry Van Ness® organization as one of the most recognized commercial real estate brands in the US for a reason—we know how to deliver a certainty of execution for our clients. Sperry Van Ness International Corporation is one of the largest commercial real estate franchisors with more than 180 locations in 200 markets.

Chicago, IL | 2015 Top #CRE Markets to Watch: Industrial

Sperry Van Ness International Corporation’s (SVNIC) 2015 Market Update Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2015. Today we are delving into the 2015 Top Industrial Markets to Watch. Not the largest or the most actively contested markets, the 2015 Industrial Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Industrial Market to Watch: Chicago, IL

Chicago: 2015 Industrial Markets to WatchThe nation’s largest industrial market in terms of inventory, Chicago is also one its strongest. Vacancy rates have been declining consistently for over three years, reaching 6.5% in the first quarter of 2015 according to Chandan Economics’ tracking of mortgage-financed properties. Lower vacancy rates and one of the strongest rates of asking rent growth in the country have prompted an increase in development activity. Investors should not be too concerned about the nearly 10 million square feet of space under construction as of early 2015, almost half of which is spec. While that level of activity could overwhelm a smaller market, it represents less than 1% of Chicago’s massive inventory of industrial space.

The drivers of demand for space in the Windy City and its surroundings are as varied as the region’s economy. Warehouses, logistics, distribution, and fulfillment centers, as well as flex space and data centers are all benefiting from growth in demand. Investors may be frustrated by the degree of competition for high quality assets. Prices reflect the market’s prospects, with cap rates falling to below 6% in 2014 and early 2015.

To read more on Chicago and other top industrial markets, download the full version of the 2015 Industrial Market Update report here.

industrial_thumbnail

It’s a different world out there.

It requires a different kind of commercial real estate firm working on your behalf in order to be successful. The Lipsey Company has ranked the Sperry Van Ness® organization as one of the most recognized commercial real estate brands in the US for a reason—we know how to deliver a certainty of execution for our clients. Sperry Van Ness International Corporation is one of the largest commercial real estate franchisors with more than 180 locations in 200 markets.

#CRE Trends and Market Update 2015 | Industrial

Industrial Market Outlook

Industrial Sector’s Time to Shine

The prominence of industrial properties as targets for investment is on the rise. A laggard in the early stages of the commercial real estate recovery, investors now rank the industrial sector ahead of all other property types for its investment and development prospects.¹ Lenders are seeing eye-to-eye with their borrowers, anticipating that industrial property mortgage volume will grow more consistently than other property types over the next year.²

2015 Industrial Markets to WatchThe drivers of the industrial sector’s headline performance numbers are varied. Breaking a pattern of decline that began in the 1980s, increasing manufacturing activity and employment since the end of the recession have supported the absorption of a wide range of heavy and light manufacturing spaces. That trend coincides with continued growth in shipping volumes, both on a large scale at the nation’s deep-water ports and along the “last mile” where fulfillment centers are allowing online retailers to shorten delivery times in major metropolitan areas.

Across all industrial subtypes, the national vacancy rate fell below 8% in the first quarter of 2015, its lowest level since before the recession, according to Chandan Economics’ tracking of mortgage-financed properties. The pace of asking rent growth has improved in kind, rising to 2.8% in 2014 from 2.0% a year before. Rent growth is projected to surpass 3.0% in 2015 with significantly stronger results in the tightest segments of the market, including fulfillment centers and the most active ports. The situation is different for functionally obsolete warehouses and assets further afield from distribution channels. In those cases, industrial properties will see further declines in performance as leases roll, diluting cash flow.

Even in the strongest segments of the industrial sector, investors should watch supply trends in their markets closely. With the support of banks and other lenders, development activity is picking up across the full range of single-tenant build-to-suit properties, partially pre-leased multi-tenant properties, and even speculative development. Construction is concentrated in Southern California, the Mid-Atlantic, in the Dallas-Fort Worth metroplex, and Atlanta. In spite of strong demand-side drivers for space, investors in these markets may find that an observable surge in speculative development risks undercutting the performance of less competitive assets.


¹PwC and Urban Land Institute, Emerging Trends in Real Estate 2015

²RELA-Chandan Survey of Commercial Real Estate Lender Sentiment Fall 2014

2015 Industrial Market Update: Manufacturing Employment

Industrial Market Statistics in 2015

Industrial development activity increased sharply in 2014 and showed no sign of losing momentum in the first quarter of 2015. Measured in terms of dollar spending, construction activity jumped 50% between 2013 and 2014 and, on its current trajectory, will soon surpass the previous cyclical high set in 2007. Development is highly concentrated in a small number of metropolitan areas, including Los Angeles and the Inland Empire in California, Philadelphia and New Jersey in the Mid-Atlantic, and the Dallas-Fort Worth metroplex and Atlanta in the South and Southeast. Investors in other markets should still keep a careful eye on construction activity. With the shortest development timeframes of the major property types, the balance of supply and demand can shift quickly in the industrial space market.

2015 Industrial Market Update: Industrial Construction Spending2015 Industrial Market Update: Change in Industrial Spending

Asking rents for industrial space nationally increased by 2.6% in 2014, surpassing the previous cycle’s high of 2.5%, recorded in 2007. Across virtually all of the major investment markets, lease rollovers in the first quarter of 2015 were accretive to property cash flow. The strongest rent gains are in close-in fulfillment centers, which have experienced a surge in tenant demand as online retailers have pushed towards the “last mile” with consumers. Lifted by the rapid expansion of cloud storage needs, data centers also registered healthy rent gains.

Differences in rent trends were pronounced across markets. In San Francisco and San Jose, demand from tech firms and others pushed asking rent increases into the double-digits. Denver and Chicago followed Northern California. In the case of the former, the legalization of marijuana production has been a primary driver of new demand for space, pushing vacancy rates to their lowest levels on record.

2015 Industrial Market Update: Industrial Asking Rents2015 Industrial Market Update 2015: Change in Industrial Rents

In spite of improving fundamentals, the national average cap rate for industrial property sales and refinancing declined only slightly in 2014, to 6.2%. Significantly below its long-term average, the cap rate still affords a relatively wide spread over benchmark treasuries. Along with the most important industrial hubs, including the Southern California markets and Chicago, cap rates edged closer to 5% in San Francisco and San José, Seattle, and Miami. Aside from Chicago’s healthy valuations, the highest cap rate markets in 2014 were concentrated in the Midwest, including Cincinnati, Cleveland, Detroit, and Indianapolis. With relatively slow rent growth, weaker assets in these markets are also amongst the most exposed to downward pressure on values once interest rates begin a sustained rise.

2015 Industrial Market Update 2015: Industrial Cap Rates2015 Industrial Market Update:  Cap Rate Spread

Market Cap Rates

Value-weighted national average industrial cap rates fell to 6.2% in 2014, marginally lower than a year before. Market average cap rates ranged from just over 5% in the Southern California agglomeration of Los Angeles, Long Beach, and Orange County to above 7% in some Midwestern and Southern markets. Detroit was the only major market to register an average cap rate above 8% in 2014.

It’s a different world out there.

It requires a different kind of commercial real estate firm working on your behalf in order to be successful. The Lipsey Company has ranked the Sperry Van Ness® organization as one of the most recognized commercial real estate brands in the US for a reason — we know how to deliver a certainty of execution for our clients. Sperry Van Ness International Corporation is one of the largest commercial real estate franchisors, with more than 190 locations in 500+ markets.

To download the full 2015 Industrial Market Outlook report, click here.

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Indianapolis, IN | 2015 Top #CRE Markets to Watch: Industrial

Sperry Van Ness International Corporation’s (SVNIC) 2015 Market Update Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2015. Today we are delving into the 2015 Top Industrial Markets to Watch. Not the largest or the most actively contested markets, the 2015 Industrial Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Industrial Market to Watch: Indianapolis, IN

Indianapolis: 2015 Industrial Markets to WatchThe industrial fundamentals for the Indianapolis market remain relatively strong despite the delivery of more than 5.5 million square feet in 2014. Those new properties helped drive Indianapolis to the top-tier of markets for rent growth. Bucking the national trend, however, the vacancy rate for the metro area jumped at the same time from a historically low 7% in the first quarter of 2014 to nearly 8% in the first quarter of 2015. Amongst the additions to the industrial landscape in 2014, online computer parts retailer NewEgg opened up a state-of-the-art fulfillment center that will service the Midwest region, processing up to an estimated 12,000 orders per day. Other large deliveries included a 1.1 million square foot distribution facility for Johnson & Johnson and a 545,000 square foot regional distribution facility for Omaha, Nebraska-based retailer Gordmans. While there are millions of square feet still under development, most of that product is build-to-suit, including a 1.2 million square foot distribution facility for Walmart and a 600,000 distribution facility for mattress manufacturer Tempur Sealy.

Occupancy rates are expected to recover some of their lost ground in late 2015 and 2016. Until those expectations are reflected in prices, investors in search of good values will find cap rates in the range of 7%, higher than in other markets with similar rent growth records in 2014.

To read more on Indianapolis and other top industrial markets, download the full version of the 2015 Industrial Market Update report here.

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It’s a different world out there.

It requires a different kind of commercial real estate firm working on your behalf in order to be successful. The Lipsey Company has ranked the Sperry Van Ness® organization as one of the most recognized commercial real estate brands in the US for a reason—we know how to deliver a certainty of execution for our clients. Sperry Van Ness International Corporation is one of the largest commercial real estate franchisors with more than 180 locations in 200 markets.

Denver, CO | 2015 Top #CRE Markets to Watch: Industrial

Sperry Van Ness International Corporation’s (SVNIC) 2015 Market Update Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2015. Today we are delving into the 2015 Top Industrial Markets to Watch. Not the largest or the most actively contested markets, the 2015 Industrial Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Industrial Market to Watch: Denver, CO

Denver: 2015 Industrial Markets to WatchThe Denver industrial market is reaping the dividends of the state’s move to legalize marijuana production. Demand for space in Denver itself, where production is permitted, pushed the vacancy rate below 3% in late 2014, the lowest level on record. The surge in demand amounts to a positive shock of between 3.5 and 5 million square feet, according to different sources. Developers are responding slowly, with roughly 1 million square feet of space currently under development. That imbalance augurs continued strength in rent gains; the sector’s greater liquidity, borne out by higher transaction volumes, suggests resilience in asset values once interest rates begin their upward hike.

In spite of its visibility, marijuana production represents a tiny fraction of industrial space leases in the Denver area. The strength of the local economy — the unemployment rate is below 4% as of early 2015 — is supporting demand across light manufacturing, distribution and logistics, and warehousing. Investors will find the market’s rosy outlook commands a high price. Cap rates in Denver declined to an average of 5.7% in 2014 across property sales and refinancing activity, lower than some coastal gateways including Washington, DC and Boston.

To read more on Denver and other top industrial markets, download the full version of the 2015 Industrial Market Update report here.

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It’s a different world out there.

It requires a different kind of commercial real estate firm working on your behalf in order to be successful. The Lipsey Company has ranked the Sperry Van Ness® organization as one of the most recognized commercial real estate brands in the US for a reason—we know how to deliver a certainty of execution for our clients. Sperry Van Ness International Corporation is one of the largest commercial real estate franchisors with more than 180 locations in 200 markets.