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SAN FRANCISCO-AMB Property Corporation launched seven new developments in the third quarter that will cost the company about $346 million and add some 3.3 million sf to its portfolio. The activity will expand the locally based industrial REIT presence in the key distribution hubs of Tokyo, Osaka, Singapore, northern New Jersey, Los Angeles, Chicago and the Baltimore-Washington, D.C. area.The company’s industrial operating portfolio was 94.6% leased as of September 30, 2004, up 100 basis points from June 30, 2004, and up 260 basis points from September 30, 2003, according to the company’s earnings report this week. That compares to a nationwide industrial vacancy of 11.2% at the end of the third quarter, according to preliminary data provided by AMB. The preliminary numbers represent a 20% improvement from the prior quarter, which if ultimately accurate would mark the second consecutive quarter of improving occupancy nationally.”On a national basis, absorption of industrial property is estimated to have exceeded 50 million sf, the highest level since the fourth quarter of 2000,” says AMB chief executive Hamid Moghadam. “The strengthening of the industrial markets which began earlier this year continues to take hold.” In Tokyo, AMB is expanding its presence with Ohta Distribution Center. The eventual 816,900-sf, seven-story logistics center is situated near the Port of Tokyo’s Oi Container Terminal, a primary gateway to trade with China. Construction of the $182-million, multi-tenant facility got underway in late September. In Osaka, Japan’s second largest city, AMB is constructing the Amagasaki Distribution Center. Approximately 50% preleased, the development is expected to offer about 1 million sf of leasable space. AMB’s total expected investment is $92.9 million. In Singapore, AMB has begun construction in the Changi International Airport market for Singapore Airport Logistics Center 2, a two-story, ramp-accessed multi-tenant distribution building located in the Airport Logistics Park. The park is located immediately adjacent to Changi International Airport, the third largest air logistics hub in the world. The $11.4-million facility will total approximately 254,300 sf. The project follows on the heels of Singapore Airport Logistics Center 1, a 230,500-sf facility leased to leading third-party logistics providers including DHL Danzas, Kuehne + Nagel, MOL Logistics and Geologistics. In Chicago, the company began further expanding its presence there with two development starts in the O’Hare International Airport submarket. West O’Hare Buildings 1 and 2 will provide 308,900 sf of cargo distribution space near O’Hare International Airport, the fifth-ranked U.S. airport for total cargo tonnage. The $23.2-million development is currently 40% preleased to global freight forwarder Panalpina Inc. In the Washington Dulles International Airport submarket, AMB has started construction on the second of two facilities at its Dulles Commerce Center. The 97,200-sf distribution facility is a $7.3 million project. Finally, on the West Coast, AMB is spending $28.9 million to expand by 280,000 sf a facility three miles south of AMB’s on-tarmac cargo buildings for client Spinnaker Logistics. On the acquisition front, AMB made two acquisitions in Northern New Jersey in the third quarter. In the largest deal, AMB paid $45.9 million for Tri-Port Distribution Center, a 490,800-sf facility adjacent to the seaports of Newark and Elizabeth that is fully leased to FedEx, AMB‘s largest corporate customer. The company also added to its Fairfalls Industrial portfolio with the purchase of a single 100,000-sf facility for approximately $5.7 million. In other news, AMB announced this week it will restate results for 2001, 2002, 2003 and the first two quarters 2004 in the wake of discovering that it should have depreciated more quickly its investments in buildings on ground leases. It had been depreciating the assets over 40 years rather than over the term of the ground lease.

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