DC Velocity - February 2012

newsworthy

Report: Demand for logistics real estate will grow in 2012

Demand for high-end industrial property used for logistics operations will continue to grow into 2012, leading to tightening capacity and rising rents until new supply hits the market later this year, according to a forecast issued in early January by a leading real estate advisory firm.

The vacancy rate for logistics facilities, which peaked at nearly 14 percent at the end of 2009, fell to under 11 percent two years later and is expected to dip into the single digits by the end of 2012, said Dallas-based Grubb & Ellis Co.

The pace of improvement will slow throughout the year, however, as new supply expands at a faster rate than demand, the firm said in a new report, The 2012 National Real Estate Forecast.

The report said new speculative development—where facilities are built with the hopes of landing a qualified occupant— emerged in 2011 after a two-year hibernation. So-called spec development, which last year focused on selected markets like Central California’s Inland Empire and Pennsylvania’s I-78 and I-81 corridors, will spread to 16 major U.S. markets in 2012 as developers and tenants gain more confidence in the resiliency of the logistics segment, which Grubb & Ellis said accounts for one-quarter of all industrial space.

The Inland Empire, which runs east from the Pacific Ocean
to California’s central core, “saw double-digit rent growth” in
the logistics category last year, the report said. This perform-
ance “will be repeated by many additional markets in 2012,”
according to Tim Feemster, senior vice president and nation-
al director, logistics, and author of the section of the Grubb
& Ellis report that focuses on the logistics segment.

Batteries Plus, a fast-growing battery and light bulb franchise retailer, has implemented HighJump Software’s warehouse management system in its new national distribution center in Glendale, Wis. … BJ’s Wholesale Club Inc. has selected RedPrairie Corp.’s transportation management system to streamline its transportation operations and reduce costs. In a related announcement, DHL Supply Chain has announced that it is introducing RedPrairie’s Warehouse Management System (WMS) and Workforce Management (WFM) tools across its operations globally to boost accuracy and individual product availability for its customers. … RMT Robotics has sold a small fleet of ADAM (Autonomous Delivery and Manipulation) mobile robots to a large international manufacturer of industrial products. The equipment, which will be installed in the customer’s manufacturing facility in Ohio, will be used to automatically transport work-in-process materials and finished goods between robotic production machines and the storage system. … Wago Corp. has awarded Schaefer Systems International a contract to upgrade its distribution center. Wago, whose alliances

corporate office is in Germantown Wis., manufactures electrical and automation components for industrial equipment. … Lucas Systems Inc., developer of the Jennifer VoicePlus voice-directed warehouse applications, has formed a partnership with Mod43 Inc., a systems integrator specializing in Oracle Warehouse Management (WMS) solutions. Under the partnership, Mod43 and Lucas will jointly deliver Jennifer VoicePlus solutions for Oracle WMS customers. … TranSystems Corp. has developed a warehouse expansion and renovation plan for the Tarrant Area Food Bank’s Fort Worth, Texas, operation. The project is currently in the capital campaign phase, with construction planned to begin this year. … Signicast, a provider of investment castings, has selected TGW Systems to supply two separate automated material handling systems for its facilities near Milwaukee, Wis. Signicast will install two Mustang Evo automated storage and retrieval (AS/RS) mini-load systems.