NEW YORK CITY-For the last couple of years, industrial space here meant a trendily decorated dot-com office. Classic industrial tenants were pushed into the outer boroughs and New Jersey. Now, one heavy hitter in particular is expressing a renewed look at industrial services and retrofitting space to meet updated industrial needs.

Steve Sakwa, directing Merrill Lynch’s current research and forecasting efforts on REITs, warns against investing within “the industrial sector, [in those] companies that have relatively low levels of pre-leasing.” He noted, “With the economy slowing and rent growth moderating in many markets, we believe that significant cost overruns will no longer be compensated with higher than expected rents, which would lead to lower than expected development returns.”

Despite this, Cushman & Wakefield says it’s planning to focus renewed energy on the industrial sector. In its efforts, New York-based C&W has named a new senior managing director of industrial services, Pamela Zoellner. The firm’s North American president Bruce Mosler announced, “Industrial, as well as retail and technology, is a main focus point for our firm in 2001 and beyond.”

When asked to discuss the company’s confidence in the sector, Zoellner tells in an interview, “It’s true e-commerce has not really proved out; a lot of them are folding as quickly as they were launched. There was overbuilding in some markets of warehouse space for these businesses and other similar e-industrial functions.” Despite this, though, she says, “We are going to get more and more involved in industrial.”

“Addressing the REIT issue [as raised by professionals such as Sakwa], yes, last year the initial four year hold was lifted and they had the ability to sell, which has somewhat overly saturated the market,” she observes. “It has become very costly to move locations within the industrial sector, though. So, the trend is to look at what can be done with existing possibilities.” She says retrofitting is the wave of today.

“The sector is looking at much more aggressive ways of counteracting costs here. Developers are looking to buy leases and are taking a more active role in working with their clients,” Zoellner reports.

Of her goals, Zoellner says she’s allowing for learning curve time. She does report C&W will be “adding more brokers and working on getting a larger market share.” As to the market, “You can gear up for the market to some degree, but the things we’re talking about doing would happen irrespective of the market.” Personally, she notes, “I do think outside the box.”

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