DALLAS-The same factors that the spring investment report from Jones Lang LaSalle claims have driven down overall US commercial real estate investment nearly 70% from last year appear to be at play in the industrial sector. But in addition to the widespread repricing of risk throughout credit markets and general economic concerns affecting the market in general, the industrial sector’s solid fundamentals, ironically, may be playing an equal role in its declining investment volumes.

“The real issue with industrial product is that the markets are fundamentally in such good shape that everybody’s happy holding,” says Cary Krier, senior vice president in JLL’s industrial services group in Dallas. “That’s dried up all the liquidity. Even if you want to buy, it’s hard to find a seller. Everybody’s paying the rent and doing well.”

According to Krier, a major factor behind the strong fundamentals is the continued, and somewhat surprising, strength of the retail industry. Though he acknowledges there are some signs of tapering, he says retail is doing much better than many people realize and certainly much better than analysts predicted. “You go through these warehouses, and people are still ordering and hiring,” he remarks. “I don’t know if they’re just reluctant to lay off people or what. But nobody’s giving back space. We don’t have a lot of sublease space creating a shadow inventory.”

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