{"id":1004608045,"date":"2022-10-21T05:08:48","date_gmt":"2022-10-21T13:08:48","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004608045"},"modified":"2023-03-22T22:38:22","modified_gmt":"2023-03-23T06:38:22","slug":"industrial-market-trends-takeaways-from-sior-create-360","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/industrial-market-trends-takeaways-from-sior-create-360\/","title":{"rendered":"Industrial Market Trends, Takeaways From SIOR CREate 360"},"content":{"rendered":"
\"\"<\/a>

SIOR Global President Patricia Loveall and Tal Hicks, President, Hillwood Investment Properties.<\/p><\/div>\n

Industrial real estate dominated the buzz at the SIOR CREate 360 conference in Dallas yesterday. And why shouldn\u2019t it? Corporate demand for industrial space is unprecedented, and the impending recession is expected to, at worst, flatten growth temporarily. The outlook for office, on the other hand, is less robust and less defined as corporations large and small go about redefining what the office means to them.<\/p>\n

Industrial brokers and developers focused on satisfying the runaway demand are not without concerns, however. The first problem is the low vacancy rate and scarcity of new development sites. According to Yardi Matrix<\/strong>, the national vacancy rate in August was 4.1 percent, down 30 basis points from July. The lowest vacancy rates were in the Inland Empire (0.9 percent), Columbus (1.8 percent), Nashville (1.9 percent), Los Angeles (2.0 percent) and Indianapolis (2.0 percent). In Dallas, the vacancy was 3.7 percent.<\/p>\n

Then there\u2019s rising interest rates, which make speculative and build-to-suit deals\u2014already burdened by supply chain issues, labor shortages, rising construction costs, and spiking rents\u2014even harder to pencil.<\/p>\n

During a panel titled \u201cCommercial Real Estate 2030,\u201d executives from some of the most active industrial development companies\u2014Hillwood<\/strong>, Prologis<\/strong> and Link Logistics<\/strong>\u2014discussed the industrial market\u2019s growing pains and how their firms are preparing for what the next few years could bring economically. Here are key takeaways from that panel:<\/p>\n

Designers Must Adapt Quickly<\/h2>\n

Architects and engineers have been rapidly redefining what a state-of-the-art industrial building looks like to accommodate tenants\u2019 desire for maximum site capacity and parking, and ceiling heights that can accommodate sophisticated Wi-Fi networks for automation and extra air conditioning.<\/p>\n

\u201c(Designers) have been in a very challenging environment, but I think they are about to get a break,\u201d said Tal Hicks, president of Hillwood Investment Properties.<\/p>\n

Entitlement Process Gets Tougher<\/h2>\n
\"\"<\/a>

Jonathan Rudersdorf, President, Prologis’ Central Region, and Brian Strohl, Senior Vice President of Development, Link Logistics.<\/p><\/div>\n

As ecommerce companies devour infill locations, local communities that challenge these projects are slowing down an already fraught development process. \u201cThere are a lot of NIMBYs out there with good reason,\u201d said Brian Strohl, senior vice president of Development for Link Logistics, which focuses on infill projects.<\/p>\n

Elaborating on Link’s community impact strategy, a company spokesperson told CPE<\/em> that the company is “focused on being a positive force for economic growth by helping businesses of all sizes find the space they need to grow through investing in job-creating facilities that spur local economies.” Link’s $8.8 billion development pipeline will create 36,000 full-time jobs as well as 56,000 construction jobs, the spokesperson reported.<\/p>\n

Communities that appreciate the benefits of ecommerce and the additional tax revenue, are tough but willing negotiators. \u201cYou have to go in with the mindset that you are going to have to sacrifice something to get what you want,\u201d said Hicks.<\/p>\n

Site Selection Requires Creativity<\/h2>\n

Developers are broadening their searches to find land for new industrial properties. Repurposing outdated structures, moving natural obstacles, and remediating brownfield sites are all in play now. Another option for infill locations is teaming up with another development project and developer.<\/p>\n

\u201cWe are now part of mixed-use as we try to be creative,\u201d said Jonathan Rudersdorf, president of Prologis\u2019 central region.<\/p>\n

Macroeconomics Impacts Industrial, Too<\/h2>\n

While the growth of ecommerce seems impenetrable, macroeconomics and the real estate capital markets will likely slow development for a period. Rising interest rates and recessionary fears have made borrowing more expensive. Meanwhile, the number of lenders willing to lend on development is shrinking.<\/p>\n

Hillwood, Hicks said, is not doing spec development even when the capital is there because of the uncertainty around interest rates and cap rates. \u201cDevelopers will need a higher yield on cost,\u201d he said.<\/p>\n

As for Prologis, the country\u2019s largest industrial owner will be “protecting its capital” and will \u201ctake advantage of what comes out of this on the back end,\u201d Rudersdorf said, noting he expects a correction on the land side.<\/p>\n

Sustainability Still Counts<\/h2>\n

Despite the urgency to meet demand, sustainability is still important, the developers stressed. Link Logistics\u2019 parent company Blackstone is \u201call in\u201d on sustainability, Strohl said, and LINK\u2019s entire construction pipeline is targeting LEED Silver.<\/p>\n

Prologis, meanwhile, has a goal of being emissions-free by 2040. \u201cThat is our goal, but that is a lot of our tenants\u2019 goals,\u201d said Rudersdorf. In deregulated Texas, for example, Prologis is working on installing on-site battery storage combined with solar. \u201cWe are starting in locations where we can control what we control and moving on from there,\u201d Rudersdorf added.<\/p>\n

The panel was moderated by Patricia Loveall, SIOR, executive vice president and partner, Kidder Matthews<\/strong>, and SIOR Global<\/strong>‘s new president.<\/p>\n","protected":false},"excerpt":{"rendered":"

While demand seems endless, development is getting more difficult, experts say.<\/p>\n","protected":false},"author":756,"featured_media":1004608048,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21781,21782,22251,21748,21742],"tags":[32897,51531,32956],"class_list":["post-1004608045","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-corporate-real-estate","category-development","category-in-focus","category-industrial","category-latest","tag-hillwood","tag-link-logistics","tag-prologis"],"acf":[],"yoast_head":"\nIndustrial Market Trends, Takeaways From SIOR CREate 360 - 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\/industrial-market-trends-takeaways-from-sior-create-360\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Industrial Market Trends, Takeaways From SIOR CREate 360\" \/>\n<meta property=\"og:description\" content=\"While demand seems endless, development is getting more difficult, experts say.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/industrial-market-trends-takeaways-from-sior-create-360\/\" \/>\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=\"2022-10-21T13:08:48+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-03-23T06:38:22+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2022\/10\/IMG-5264.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"800\" \/>\n\t<meta property=\"og:image:height\" content=\"621\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Therese Fitzgerald\" \/>\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\/industrial-market-trends-takeaways-from-sior-create-360\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/industrial-market-trends-takeaways-from-sior-create-360\/\",\"name\":\"Industrial Market Trends, Takeaways From SIOR CREate 360 - 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She got her start writing about the New York City market with Real Estate Weekly and later joined CPE\u2019s predecessor publication, Commercial Property News, where she held various positions including editor in chief. In addition to working on the CPE and MHN websites, she edits CPE's Capital Markets Newsletter and MHN's Finance & Investment Newsletter. 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