{"id":1004098138,"date":"2014-06-10T09:31:13","date_gmt":"2014-06-10T17:31:13","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004098138"},"modified":"2022-12-08T15:44:24","modified_gmt":"2022-12-08T23:44:24","slug":"i-con-special-report-robust-industrial-market-ahead-for-much-of-north-america","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/i-con-special-report-robust-industrial-market-ahead-for-much-of-north-america\/","title":{"rendered":"I.CON Special Report: Robust Industrial Market Ahead for Much of North America"},"content":{"rendered":"

By Paul Rosta, Senior Editor<\/em><\/p>\n

The North American industrial sector offers much to cheer and a few reasons for caution, according to experts at I.CON, an international conference organized by NAIOP on Thursday in Jersey City, N.J.<\/p>\n

\u201cWe have had a tremendous ride,\u201d said Rene Circ, director of industrial research for PPR\/CoStar. Sixteen consecutive quarters of positive net absorption, on top of a dearth of new construction, has reduced the vacancy rate in the United States from 13.4 percent to 9.2 percent. That ride should continue for a while longer; PPR\/Costar\u2019s current forecast calls for another five or six quarters of net absorption that will shave 50 points off the vacancy rate. In contrast to the previous growth cycle, which was driven primarily by China, the rise of e-commerce is the predominant factor in today\u2019s expansion, Circ added.<\/p>\n

Through 2018, the PPR\/CoStar forecast indicates that U.S. industrial rents will reach unprecedented levels. Meanwhile, although speculative construction has returned, today\u2019s development pipeline of 110 million square feet is only about 60 percent of the typical 160 million to 170 million square feet of new product. These trends are also affecting asset values. Cap rates average about 7 percent overall, and in an increasing number of markets, rates for Class A industrial properties hover around 4 percent, Circ said, \u201cand that we have never seen before.\u201d Buying Class A properties for below replacement cost is difficult, he noted; meanwhile, Class B assets are trading for about 8 percent below replacement cost. Warehouse portfolios are commanding a premium of 15 percent, up from 10 percent in 2006-07.<\/p>\n

Robust growth in Mexico\u2019s nearly $1.2 trillion economy is creating vibrant opportunities for industrial developers and investors, said Gary Swedback, president of NAI Mexico. \u201cWe\u2019re seeing vacancy rates between 5 percent and 10 percent\u201d in most of the nation\u2019s industrial markets, he reported. Swedback cited the nation\u2019s vast natural resources, deeply integrated economy and $10,000 per capita income. \u201cDon\u2019t forget the inland ports, or the rail systems that connect\u201d Mexico, the U.S. and Canada,\u201d he added. He noted that Mexico is launching what is expected to be a 10-year run of domestic and foreign investment.<\/p>\n

Swedback detailed the global investment that is validating Mexico\u2019s growing maturity as an economy and as an industrial market. Nissan, General Electric, Honeywell and 3M are all developing research and development facilities in Mexico. Since 2012, Nike, Jabil and 3D Systems have all relocated operations from China to Mexico. Key areas for industrial real estate investment include such border areas as Tijuana, Juarez and Reynosa, as well as Monterrey (\u201cthe Chicago of Mexico,\u201d as Swedback described it, as well as Mexico City, the world\u2019s third largest metropolis.<\/p>\n

Canada presents steady, if more modest potential for industrial development and investment. Construction costs are rising faster than rental rates, few merchant builders are developing new product, and institutional investors are pursuing local positions, explained Gordon Cook, executive vice president for Colliers International. \u201cCost constraints are generally holding back development across our country,\u201d he said. Cook called the Calgary\/Edmonton industrial market \u201cour shining star,\u201d thanks largely to a 3.5 percent GDP growth rate.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

The North American industrial sector offers much to cheer and a few reasons for caution, said experts at NAIOP’s international conference in Jersey City, N.J. on Thursday.<\/p>\n","protected":false},"author":445,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21782,21748,16,21783,21742],"tags":[],"class_list":["post-1004098138","post","type-post","status-publish","format-standard","hentry","category-development","category-industrial","category-international","category-investment","category-latest"],"acf":[],"yoast_head":"\nI.CON Special Report: Robust Industrial Market Ahead for Much of North America - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/i-con-special-report-robust-industrial-market-ahead-for-much-of-north-america\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"I.CON Special Report: Robust Industrial Market Ahead for Much of North America\" \/>\n<meta property=\"og:description\" content=\"The North American industrial sector offers much to cheer and a few reasons for caution, said experts at NAIOP's international conference in Jersey City, N.J. on Thursday.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/i-con-special-report-robust-industrial-market-ahead-for-much-of-north-america\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2014-06-10T17:31:13+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-12-08T23:44:24+00:00\" \/>\n<meta name=\"author\" content=\"Paul Rosta\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/i-con-special-report-robust-industrial-market-ahead-for-much-of-north-america\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/i-con-special-report-robust-industrial-market-ahead-for-much-of-north-america\/\",\"name\":\"I.CON Special Report: Robust Industrial Market Ahead for Much of North America - 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