The industrial sector, which has been dormant as manufacturingplummeted, may be showing signs of vitality. A recent CIRE articlepointed out many positive developments and industry insidersconsider this a hot topic. With net leases becoming ever morepopular within the industrial sector; NNN investors could haveaccess to a land of opportunity.

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Here are some highlights from the CIRE piece:

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•Investment activity and user sales increased approximately 35percent and 50 percent respectively from 1Q09 to 1Q10.

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•Capitalization rates climbed from 8.8 percent to 8.9 percentduring this period but are expected to tighten as demand picksup.

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•Though institutional investors ramped up in the first quarter,private investors and regional owner-users, motivated by thenarrowing bid/ask gap, still accounted for the majority oftransactions.

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•In smaller markets, owner-users are grabbing up vacant 25,000-to 300,000-square-foot industrial properties to accommodate the45,000 manufacturing positions that employers added in the firstquarter.

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•In markets where institutional investors are active, there’s aflight to quality.

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•Distressed industrial properties remain rare due to the uniquenature of the asset. As of 4Q09, industrial properties representedonly 3 percent of the $172 billion in total troubled assets,according to Real Capital Analytics.

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These signs point to an industry ready to shake off the coils ofinactivity. Investors who want to diversify or simply takeadvantage of a positive trend should find this an attractiverefuge. The current in all areas seems to point to higher qualityand this often correlates to net lease properties. As more demandenters the industrial sector, net leases could see a correspondingrise.

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Numerous meetings, with various net lease institutional buyers,have conveyed that the industrial sector is high on the list ofwhere investors are looking to place capital. It would be of nosurprise if there were a number of larger net lease industrialtransactions announced during the summer months.

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Jonathan Hipp

Jonathan Hipp began his career in real estate over 25 years ago. In his early years as a broker, he ventured into the net lease industry and quickly began leading the US net lease market, closing over $3 billion in transactions. In 2005, Jon founded Calkain Companies, a company focused solely on net lease investment services. As President and CEO, he has been instrumental in building the firm into one of the leading Net Lease real estate companies, transacting over $12 billion of net lease deal volume over the past 13 years. He has expanded Calkain’s services to include brokerage, advisory, asset management, capital markets, and industry research. He has become a well-known resource, panelist, and speaker at various Net Lease and Industry conferences and is a regular contributor to GlobeSt.com on real estate trends. In June 2015, Jon’s passion for the real estate business was again recognized as he was nominated for the Top Real Estate Player in the DC area by SmartCEO magazine.