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NEW YORK CITY-Industrial investors and developers should have minimal problem securing equity and debt financing in 2008, according to a quick sampling of real estate professionals. “Industrial has been very much in favor in terms of financing, and it continues to be in favor,” affirms Spencer Garfield, managing director of Hudson Realty Capital based here. “Industrial doesn’t get the kinds of headlines other sectors do, and that’s shielded it from the worst impacts of the credit crisis.”

Garfield calls industrial the “bread and butter” of the investment world, a reliable product that is always needed and less subject to fluctuations in demand. “Where there have been huge run-ups in prices and lowered cap rates on other asset types, industrial has not moved that much, so it’s not going to fall off that much,” he says.

Cary Krier, senior vice president in the Dallas office of Jones Lang LaSalle, agrees with Garfield’s assessment, but he emphasizes this doesn’t mean the credit crisis has had no impact at all. “The assumptions we’re building into models today are very different from a year ago,” he says. “Everything has to cash flow now. You can’t get by on expectations of large rent increases. You have to show income from the start.”

Yet even that isn’t 100% true, says John F. Pantone, senior vice president in the Chicago office of Buchanan Street Properties, which is close to sewing up $66.6 million in bridge financing for the acquisition of a vacant 770,000-sf historic warehouse property in Washington, DC. The loan is coming through even though the site will have to be redeveloped before it can be leased out and start generating revenue. On the other hand, the Newport Beach, CA-based company had to provide $32.8 million of equity, or nearly a third of the purchase price, to assure financing.

Buchanan purchased the property, a former department-store warehouse, from Macys Inc. in a joint venture with Patriot Equities, a Philadelphia-based company that specializes in buying and redeveloping excess corporate assets. Pantone reports the site will probably be redeveloped with a combination of storage and warehouse-type retail uses. He says both uses are in short supply in the immediate market, which helped give the lender confidence in the project’s potential.

Both Garfield and Krier believe investment demand for industrial property will remain strong through the year. The former notes that his company has several industrial deals in play, including acquisition of a B note on a flex-office property with some industrial in Atlanta, buying some distressed debt secured by industrial assets in Florida, as well as possibly developing an industrial project in that state. The latter says allocations in general for industrial investment are at least equal to last year and in many cases greater.

“Everybody’s still under allocated in industrial, on both the lending and equity side, because deals are smaller,” he observes. “If you’re a developer and you’re building spec, there are markets where financing will be difficult. But for stabilized assets, I don’t think there’s a problem in any market. The fundamentals are still very strong. There are no real overbuilding issues; we haven’t seen much sublease space and cap rates haven’t increased.”

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