C&W See Positive Outlook for U.S. Industrial RE Through 2013

Mid-year statistics reported by Cushman & Wakefield reflect a "widely sustained positive outlook" for the industrial real estate market in the United Sates for the balance of 2013. "Retail, wholesale, e-commerce and logistics requirements are driving demand in many of the nation's major industrial hubs,"according to Cushman & Wakefield's John Morris, leader of Industrial Services for the Americas. The commercial real estate services firm's mid-year statistics released today reflect this positive trending.. "In Houston, however, the energy industry accounted for a bulk of the leases signed in the last 18 months. Overall, Class A space continues to disappear in many markets as tenant demand remains steady. With quality options dwindling, both speculative and build-to-suit construction have gained some momentum in a number of markets."

"Retail, wholesale, e-commerce and logistics requirements are driving demand in many of the nation's major industrial hubs," Morris noted. "In Houston, however, the energy industry accounted for a bulk of the leases signed in the last 18 months. Overall, Class A space continues to disappear in many markets as tenant demand remains steady. With quality options dwindling, both speculative and build-to-suit construction have gained some momentum in a number of markets."

But, as the Wall Street Journal reports, much of the new construction is speculative, meaning developers are looking for tenants even as the walls are raised on new buildings. Prologis, for example, just completed an 800,000-square foot warehouse in Redlands, California, that has yet to be leased. Speculative development was the rage in all commercial real-estate sectors before the economic downturn. But developers of office buildings, shopping centers and most other property types have been slow to return to this high-risk strategy, primarily because they can't obtain debt financing.

New industrial construction completions during the first half of 2013 totaled 19.7 million square feet, including 12.5 million square feet of speculative development. An additional 21.8 million square feet of spec projects are scheduled to be completed by year-end.

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