DC Velocity - September 2012

transparent real estate market in the world, and despite its many problems, the U.S. economy continues to expand, albeit modestly. For investors that have been unsettled by the turmoil in Europe, continued stagnation in Japan, and the possible slowdown in China, the U.S. market looks increasingly appealing, they say.

In addition, more companies are moving production and distribution closer to U.S. end markets to reduce overseas shipping costs and carbon emissions. As a result, U.S.-domiciled warehouse and distribution centers look like sound investments and are attracting foreign capital, sources say.

“Compared with other product
types, industrial properties are less
capital-intensive, have not historically
experienced the highs and lows in
rental rates, and remain a stable and
predictable asset class,” says Mike
Fowler, executive vice president at
Jones Lang LaSalle Inc., the Chicago-
based real estate and logistics firm that
consulted on the Goodman deal. “The
evolution of global economics and the
global supply chain are transforming
the U.S. industrial real estate land-
scape and attracting the attention of
some major global players.”
In 2011, sales of U.S. industrial
property hit $35.1 billion, more than
three times the low of $10.9 billion in
recession-plagued 2009. Sales should
reach $40 billion to $45 billion in
2012, according to Jones Lang
LaSalle’s projections. It is unclear how
much of those totals were derived
from foreign investment.

Most of the foreign investment in the U.S. market comes from Canada, Germany, Switzerland, and Great Britain, says Kevin McGowan, a director at the Wayne, Pa.-based commercial real estate firm of Newmark Knight Frank Smith Mack.

Although foreign investment has increased, the U.S. industrial vacancy rate sits at 9. 1 percent, still well above pre-recession levels of 7. 5 percent, Jones Lang LaSalle says. ;

—Mark Solomon

go figure …

90%

The percentage of truckers surveyed who cited “fuel station availability” as the biggest impediment to converting their fleets to natural gas power from diesel fuel.

SOURCES: TRANSPORT CAPITAL PARTNERS, ACT RESEARCH

Still pain in the health care supply chain

For the second consecutive year, concerns over product safety and protection were high on the list of challenges facing key health care supply chain executives, according to a survey conducted on behalf of UPS Inc.

The fifth annual survey, “Pain in the (Supply) Chain,” took the pulse of 375 senior-level decision makers in the United States, Western Europe, Asia, and Latin America who oversaw supply chain and logistics at companies in four health care segments. Of those, 57 percent said their chief supply chain concern was securing their products and ensuring their integrity.

Concerns over product security and integrity were more prevalent in emerging markets than in developed ones. In many emerging markets, those were the leading concerns of supply chain managers, according to the survey, which was taken in April and May of this year.

In 2008, only 13 percent of health care decision makers cited “ security” as a supply chain issue. That number rose to 40 percent in 2010 and spiked to 61 percent last year before leveling off in 2012.

Concerns about product safety and protection could be rising as health care firms extend their reach into far-flung markets where transportation, storage, and distribution present unprecedented difficulties for supply chains.

With the advent of globalization, health care executives have
“reported growing concerns around the areas of product protection
and intellectual property protection,” UPS said in a statement accom-
panying the report. “Product protection concerns include both prod-
uct security and the issue of product damage and spoilage. Concerns
around intellectual property protection have grown every year for
the past three years.”
More than 83 percent of respondents said their top two strategic
initiatives involve expanding into global markets and investing in
new technologies.

The top overall supply chain concern—cited by 65 percent of respondents—was regulatory compliance. That was followed at 60 percent by cost containment. Only 41 percent of the respondents said they’ve been able to successfully manage their supply chain costs, according to the survey.