Market Update – 6/13/09
Tough to measure the industrial real estate markets by the week or even by the month but it seems like we are getting so many mixed signals from the economic “experts” these days. Many interpreting the same information differently. So…here’s a quick update…one might say a quick “View for the Street”.
Just like retailers, the industrial markets need shoppers before we can have buyers. Well, today we are seeing more shoppers…just not sure if they are “buyers” yet (tenants included). That’s the good news. The bad news is that those shoppers are definitely seeing more product when they go out and look. Yes, there continues to be more product (buildings) coming on the market than coming off. So, while sellers are seeing more showing activity they need to deal with the fact that those “buyers” have more choices (thus more control on pricing).
The majority of market transactions continues to be in the lease renewal world. Tenants taking advantage of today’s markets by pushing landlords to renew early (including a lower base rent) or vice versa…Landlords pushing tenants to renew early to “firm up” their tenant base. Either way, both sides win. Tenant and landlords…if you haven’t thought about doing this…you need to!
Market lease pricing continues to adjust downward. Good news is that it still isn’t a slide. Yes, there are exceptions. Most notably in the large building sector (100,000 sf plus). The vacancy rate in that market has increased to the point of very aggressive landlord pricing. That said, we’ve seen 10-15% lease rate adjustments in the small-mid size markets in the last 6 months.
Not sure if my opinion has changed much over the last few months though. I still believe that we will be seeing a rebound in the economy before we see blood in the streets in the industrial real estate markets.