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HASBROUCK HEIGHTS, NJ-Yesterday’s RealShare Industrial East conference, sponsored by Real Estate Media, focused on the industrial sector in both a local and a national/international sense. Against that backdrop, two top real estate execs fielded 10 questions on market trends in a unique Fact or Fiction session format. The final question was, “Has the industrial real estate market in the East peaked, and we just don’t know it?”

“Absolute fiction,” responded Michael Brennan, president and CEO of First Industrial Realty Trust. “The eastern region may be one of the best in the country,” he added, citing the region’s assets, including proximity to markets and shipping routes.

“Fiction,” similarly responded Jim Lee, president and COO of Opus East. “The reality is, we’re tearing more buildings down that are obsolete than other regions have buildings. This market has intrinsic values and the overall opportunity is still here.”

With the market thus pronounced “fit,” Curtis Spencer, president of logistics consulting firm IMS Worldwide Inc., offered up the global context for the industrial market, both in the east and nationally, in his keynote address.

“The US is a retail consumer machine that’s driving industrial development,” Spencer told the event’s 250 attendees, providing a segue into the Asian factor. “Lower cost labor is driving the bus,” he said, explaining that’s changed the nature of industrial real estate in the US from consumer goods manufacturing, much of which has gone to China and other countries, to warehousing and distribution.

“That old manufacturing plant has been shifted to a full-blown consumer goods facility,” Spencer said, citing shipping statistics from China and other Asian countries to US destinations. “The impact has been double-digit growth in East Coast port volume,” which leads to a growing need for W/D facilities here, he said.

For the New York/New Jersey region in particular, “there will still be demand as long as there is population growth and 50 million people live within a one-day truck drive of the ports,” Spencer said. “There are also brownfield and tear-down opportunities that don’t exist in other markets, such as Los Angeles/Long Beach.”

Among the challenges cited by Spencer, not only for the East, but in the larger national market, that have to be addressed: Limited physical capacity, and a rail infrastructure that’s improving faster than the roads. The latter is critical because for most of the country, trucking is more important for W/D than the railroads, he explained.

Another trend he cited as beneficial for the eastern market is the emergence of alternate shipping routes, the Panama and Suez canals among them. In other words, “goods are no longer necessarily being shipped to Los Angeles/Long Beach from Asia, off-loaded, then shipped across country by road or rail to the East Coast,” Spencer explained. “More shippers are using all-water routes directly to the East,” which requires expanded port and W/D facilities in the region.

“There is a definite trend of port diversion–moving out of Los Angeles/Long Beach to other ports, like Houston, Savannah and Norfolk,” he said, noting that such retailers as Wal-Mart, Target Ikea and Toys ‘R’ Us are among the retailers doing just that.

The RealShare Industrial East program also included a one-on-one “Inside the Real Estate Mind” discussion between Hamid Moghadam, chairman/CEO of AMB Property Corp., and Michael Desiato, group publisher and editorial director of Real Estate Media. In that discussion, Moghadam discussed his personal and professional philosophies, his strategies for AMB, and the outlook for industrial real estate in the eastern US. He termed it “very positive,” noting his company’s increased presence in the region.

RealShare Industrial East, along with other RealShare Conference events nationwide, is produced by Real Estate Media, publishers of GlobeSt.com, Real Estate Forum, Real Estate New Jersey and other print and online publications devoted to commercial real estate.

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