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CHICAGO-Investing in warehouse properties may no longer be the “bread-and-butter” play it has long been, suggests Real Estate Research Corp. CEO and managing principal Kenneth P. Riggs Jr. “We believe industrial is a lot more controversial than people report,” says Riggs, whose company co-authored a 2004 forecast.

“Warehouse has always been considered a bread-and-butter, low-volatility product type, but those days are over,” Riggs tells GlobeSt.com. He points to new developments such as CenterPoint Properties Trust’s Ford Supplier Park on the city’s Southeast Side, which takes just-in-time inventory controls and other technology to another level. “They know within 30 minutes when parts will be put on an assembled car,” Riggs notes.

However, Principal Real Estate Investors, which also co-authored “Expectations & Market Realities in Real Estate: 2004″ with Torto Wheaton Research, is “very bullish about warehouse demand,” says president and chief investment officer Randall C. Mundt.

The US population can be expected to increase by 25 million every decade, Mundt argues, and that means more durable goods to be stored before they are sold. “Consumer demand for things is still going up strongly but the average amount is inventory is very, very low,” Mundt says.

Mundt concedes the industrial sector faces challenges in the short-term, having already been hit with sliding rents and vacancies that have eclipsed those seen in the early 1990s downturn. In addition, “Warehouse construction hasn’t slowed as we would have liked,” he adds.

However, Riggs offers a silver lining. “Relative rent levels and the cost to retool aren’t that high,” he adds.

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