ORLANDO-A new trend coming in the industrial real estate market is the development of super-sized warehouses overseas by American manufacturers whose production operations are already abroad, George D. Livingston Jr., president of NAIOP’s Central Florida chapter, tells GlobeSt.com.
“Manufacturing continues to move overseas due to lower production costs” and warehouses will soon follow that same path, says the founder/chairman of NAI Realvest Partners Inc., Maitland, FL. “Consolidation of distribution space into fewer, larger facilities continues.”
Los Angeles, northern New Jersey, Chicago, Dallas and Atlanta are the hot spots for consolidations of supply chain and distribution centers, he says.
The broker predicts 500,000 sf to one million-sf distribution centers will be commonplace shortly. Ceiling heights in new product will be 34 feet to 36 feet, up from 24 feet to 30 feet in most existing properties. Cubic feet will replace square feet as the measuring stick for most warehouses in the newest big-box design trends.
New technology will usher in more super-flat floors, custom racking, scanners, pick systems and broadband access. Truck courts will run 130 feet to 140 feet deep as trucks continue to be the preferred transportation mode by most manufacturers, Livingston tell GlobeSt.com.
“Large investors and operating companies are concentrating only on the largest markets, as measured by population,” Livingston says. “This will provide opportunities for developers in markets other than their own.”
On the investment side, the broker says “mid-market transactions are down and will not recover until the economy rebounds.” But he doesn’t see that happening until well into 2004.
“This is a good time to refinance and hold,” he suggests to property owners, advice most investment brokers prefer not to hear because it blunts potential sales. Livingston says “demand (of industrial product) exceeds supply and cap rates are low.”
It’s also a good time to buy properties, “especially for value-added properties or for users due to the low cost of money,” he says. Users are buying more smaller companies than larger ones. “Beginning in 2008, pension funds will be net sellers of assets to meet payout requirements,” the broker says.
On the leasing side, demand for new product is weak while renewals are at a record high. “Tenants are negotiating hard and many are taking short renewals and deferring expansion decisions to later,” Livingston tells GlobeSt.com.
He says he heard similar sentiments and trends at the Oct. 2-3 industrial real estate summit in Las Vegas.