SANTA ANA, CA –Los Angeles will be the best market for industrial real estate investment from now through 2013, according to the 2009 rankings of the Investment Opportunity Monitor from Grubb & Ellis Co. The monitor is part of the firm’s 2009 Global Real Estate Forecast report, released Jan. 5.
For the third consecutive year, the monitor finds that the logistics business is the primary driver of demand for industrial space. Los Angeles retained the top spot on the list due to its proximity to the busiest ports in the US, negligible vacancy level and shortage of developable land. Other cities with nearby port facilities also achieved high rankings. Houston took second spot, while Oakland, CA. and Seattle tied for fourth, Miami grabbed eighth, Portland, OR ninth and New Jersey 10th. The only inland distributions hubs to make the top 10 were Atlanta at No. 3, Dallas at No. 6 and Chicago at No. 7.
While Grubb & Ellis senior vice president and chief economist Robert Bach says the economy will struggle in 2009, dampening demand for all product types and resulting in negative absorption and increased vacancy, he notes that ultimately, the industrial market will recover more quickly than the office market because the construction pipeline is set to thin out sooner.
“Businesses look at industrial space as a productivity enhancer, an integral part of their supply chain strategies,” he points out. “Their relentless quest for cost-saving efficiencies should sustain demand for industrial space in 2009, despite the weak economy. However, supply is expected to outpace demand, with absorption dipping into the red and the vacancy rate rising by 60 basis points to end the year at 9.4% as the construction pipeline delivers space still underway.”