According to Hansson, demand for larger distribution facilities, as well as un-interrupted expansion by large retailers into markets that they currently do not service, leads growth in these two markets. Hansson says that, during the meeting, participants questioned why these two markets continue to strive through uncertain economic times.
"Howard Carr from the Howard Group TCN in Albany indicated that consumers still have money in their pockets to spend and retailers promoting growth in selling essential products continue to want to expand," reports Hansson. "He further added that the recent first wave of Kmart closures was quickly re-leased. The retail market is watching carefully how much interest the next wave of Kmart closures retailers will have in re-leasing these properties."
"In the industrial sector, the need to create more efficient distribution networks has been the key to this strong market," he adds. "Concerns of creating better distribution hubs dealing with anything from city congestion issues, transportation and lower labor costs have all led to a re-thinking by businesses and therefore a need for new facilities."
However, Hansson sees irony in the fact that despite the strength of these markets, the general office market remains flat. In San Francisco, rental rates have decreased from over one hundred dollars to twenty to thirty dollars. Most major markets are having a difficult time absorbing both large sublease spaces, as well as direct spaces currently available.
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