Last year was one of recovery for the US commercial property market, but the runaway winner when it comes to real estate investment was undoubtedly the industrial sector. The fourth quarter of 2012 was one of impressive growth for industrial property, despite budget uncertainties and national disasters, according to the latest analysis from the CBRE Group, Inc.
National industrial availability fell by 30 base points during Q4 to 12.8 per cent. This represents the largest quarterly reduction since the recovery began in 2010 and leaves availability down 180 base points from its Q3 2010 peak of 14.6 per cent. Jon Southard, managing director of CBRE's Econometric Advisors group, commented: "The broken record of slow but positive progress toward a real estate recovery continues to repeat. The change of note from this persistent trend is the improvement in the industrial sector as shipments are increasing at a faster pace than employment."
Recovery in the sector has been broad-based, however, with 40 markets posting declines, 16 increases, and 15 no change. Minneapolis has enjoyed the greatest fall in availability, dropping 140 base points in the final quarter of the year. Detroit also enjoyed an increase in activity, posting a 130 base point drop in availability. Salt Lake City was another strong performer, with availability decreasing by 120 base points.
At the other end of the spectrum, Chicago - the US's largest industrial market - experienced just a 20 base point fall, while the second largest market LA was unchanged. This indicates that property investors are looking away from traditional hubs and are expanding into new environments. For the US industrial sector, this is good news, ensuring there is widespread activity across the nation.
The increase in industrial occupancy is also a positive sign for the US economy, indicating a return to production levels and pre-financial crisis confidence. However, caution is always advised and the road to recovery across all markets may be a slow one for the country.
- Monday 14 January 2013