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When ProLogis announced it was acquiring real estate investment trust Catellus Development Corp. earlier this year, the news sent shockwaves throughout the global commercial real estate markets. With completion of the deal set for the fall, ProLogis will solidify its position as the world’s dominant logistics provider and will own or manage 2,079 distribution facilities serving more than 4,100 customers in 76 markets worldwide.

The upturn in development and mergers and acquisition activity signals not only an improving environment for industrial assets, but also reflects the changing structure and dynamics taking place throughout the industry. As part of the ProLogis-Catellus deal, for example, the company is intensifying North America development, both in build-to-suit and in inventory space.

The outcome of the ProLogis-Catellus consolidation and others benefit all parties involved, from the developer to the tenant to the shareholder. As a result, the marketplace is shrinking from a large field of players to a quantified number of large companies.

Investors Upping Industrial AcquisitionsDuring the first half of 2005, investors spent close to $11 billion purchasing industrial real estate, nearly double what they did in the same period last year. Part in credit to the thriving global trade, bulk warehouses are in demand.

Catellus’ purchase isn’t the first notable consolidation in the industry. In 2001, Equity Office Properties Trust acquired Spieker Properties Inc., and Keystone Property Trust was also acquired by ProLogis last year. ING Clarion has purchased 250–or $1.6 billion in–industrial properties since 2004.

A real estate portfolio joint venture between CalEast Industrial Investors and LaSalle Investment Management was bought by Deutsche Asset Management’s Rreef in May 2005. The $800-million purchase allowed Rreef to acquire 90 distribution properties at 25 airports in the US and Canada.

On the brokerage side of the house, consolidations are resulting in similar outcomes. When CB Richard Ellis acquired Insignia ESG in 2003, the company’s presence in urban markets like New York City went from wanting to overwhelming, successfully establishing the world’s largest commercial real estate entity the company says can offer clients an “optimal balance of worldwide reach and specialized services.”

From a business point of view, consolidation makes sense. Relationship-building is crucial to any deal, and by diversifying a company’s business reach, clients satisfied with the service they are receiving from one company will look to fulfill business needs at the same shop. The result? Higher revenue, satisfied clients and less competition.

Global Economy Hits HomeAs a whole, the industrial market is seeing significant shifts in tenants and business practices.

During NAIOP’s recent industrial conference, leaders from across the country gathered to discuss and debate the challenges facing the industrial segment of commercial real estate today. Conference attendees predicted a brighter future and noted that the effects of a global economy are reverberating through the supply chain. Among the discussions were:

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