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WHERE IS INDUSTRIAL’S BEST GROWTH BET?

William D. Friedman is vice president of supply chain and intermodal operations for Duke Realty Corp. in Indianapolis.

Global beats the US in terms of its growth potential in the industrial sector. That’s what respondents to last week’s Feedback Poll are telling us–and it’s beating us by large numbers. Some 41% say overseas will see the greatest growth in the sector, while less than 30% favor any one stateside region. SoCal ranked the strongest, with 27% of the vote, the Midwest ranked strongest, with 27% of the vote, followed closely by the Midwest’s 25%. The Northeast trailed a pitiful third, not even breaking into double digits, at 7%. Commentator Friedman provides his take on the dynamics impacting those numbers:

“Essentially, I agree with the numbers. Southern California is still red hot, being driven by the international trade through the big ports, with the Midwest, which is at the receiving end, getting a lot of the product coming from those ports. So it all stands to reason.

“I don’t think New Jersey is becoming less of a factor, but the low numbers may be a reflection of the overall Northeast industrial market cooling a bit. Ground is very difficult to find for new development. It might be moving a little to the south and west.

“There is no Southeast or Southwest in the poll, but I look at everything in terms of the supply chain and the logistics primarily and the real estate point of view secondarily. I look at what’s happening in the ports and in the Southeast, and they are still on a strong growth trend. We’ve seen places like Savannah, GA; Charleston, NC; and Jacksonville, FL as benefiting, with new development on the industrial side and more national players moving into those markets. And Atlanta benefits from this to a certain point.

“In terms of the global markets, while I don’t follow outside the US very closely, China is going to have the growth–no question–and it’s going to be two-way–driven by outbound supply-chain needs and the reverse as we start to see more flow back to China. In terms of Mexico, the way I see it, you have port development taking place on the West, and some of the conventional wisdom is that those will be gateways to the US, but I see it more just as gateways for Mexico, at least initially, serving Mexico City and the other population centers there.

“Overall, those numbers will hold up certainly into ’08 and probably well beyond. The Southern California ports can continue to absorb growth, which will translate into continued strong demand in that market. Overseas, there are lots of regions around the world that are developing faster and will see higher growth rates than we will in the US.”

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