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Building from the Ground Up – 10 Commercial and Industrial Real Estate Facts

Image: crane over two buildings under construction to illustrate commercial and industrial real estate

 

Every street is wall street when you’re talking about the commercial and industrial real estate that users build, buy, sell, lease, build, improve or tear down. From office buildings to warehouses, high rises to factories, this is the real estate that businesses call home.

 

NO VACANCY: Currently, the strongest CRE sectors are clearly multifamily and industrial. The U.S. apartment sector absorbed 125,000 rental units in 2012 – easily eclipsing the pre-recession annual average of 45,000 units. National apartment vacancy is currently a razor thin 4.8%, and demand for industrial space has also exceeded pre-recession levels. (Source: Cassidy Turley) Tweet this Newz!

 

SUNNY SIDE UP: According to the latest figures available from the Real Estate Board of New York, the average retail price sought per square foot in Manhattan in spring 2013 was $116, up 5.4% from fall 2012. Even more, retailers are paying a higher premium for the sunny side of the street as it seems to attract more customers. (Source: NY Times) Tweet this Newz!

ASSESS YOUR ASSETS: Tenants are increasingly paying attention to the total cost of ownership, including energy costs. As a result, asset managers often target energy efficiency improvements as part of larger renovation projects to attract and retain tenants as well as increase asset value. Depending on the building, utility costs can be reduced by 10% to 20% with relatively low capital investments and payback periods of one to three years. (Source: National Real Estate Investor) Tweet this Newz!

 

OUT OF A TOUGH TROUGH: U.S. commercial-property values have increased 42% since hitting their post-crash trough in 2009, according to the Moody’s/REAL Commercial Property Price Indices. (Source: Wall Street Journal) Tweet this Newz!

 

MADE IN AMERICA: More than half of executives at manufacturing companies with sales of more than $1 billion plan to return some production to the United States from China or are considering it. That’s up from 37% in February 2012. (Source: Economix/New York Times) Tweet this Newz!

 

LOCATION, LOCATION, LOCATION: With e-commerce consumers expecting at least the option for next-day delivery and the added labor intensity of the facilities, factory locations near major population centers are a must. Approximately 35% of retail-related industrial demand is in the Northeast, notably in eastern Pennsylvania and central New Jersey, followed by around 27% in southern California markets such as Los Angeles and the Inland Empire. (Source: Area Development) Tweet this Newz!

 

FOREIGN INVASION: Under the Foreign Investment in Real Property Tax Act (FIRPTA), foreign investors selling U.S. real estate must withhold 10% of a property’s sale price to ensure payment of any taxes owed. The proposed changes could result in an increase in cross-border capital flows—which comprised slightly less than 10%, or $26.9 billion, of total U.S. commercial real estate transaction volume in 2012. (Source: CBRE) Tweet this Newz!

 

WHAT ELEPHANT? Amazon, the e-commerce giant has invested roughly $13.9 billion since 2010 to build 50 new warehouses, more than it had cumulatively spent on storage facilities since its 1994 founding, bringing the total to 89 at the end of 2012 with 5 more planned for 2013. (Source: Bloomberg Businessweek) Tweet this Newz!

 

HOLIDAY RUSH: Container cargo volume rose 6% in August, compared with that month last year, at the ports of Los Angeles and Long Beach, CA., and the nation’s ports are expected to see October volume rise 9.1%, compared with last year, as retailers stock up for the holidays. (Source: NRF) Tweet this Newz!

 

THAT’S REIT: Overall, REITs have underperformed the broad market through September of this year with the exception of  three segments — the commercial financing mortgage niche, lodging and resorts and self-storage — all of which logged double-digit total returns. (Source: Investor’s Business Daily) Tweet this Newz!

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