DC Velocity - December 2014

newsworthy
22 DC VELOCITY DECEMBER 2014 www.dcvelocity.com
The industrial property sector is partying like it’s, well,
2005.

The market—which lumps together manufacturing, warehouse and distribution, transportation, and logistics facilities—is experiencing one of its strongest cycles in years. Warehouse rents are rising, with the average rental rate up 4. 4 percent from a year ago, according to JLL, a real estate and logistics company. CBRE Inc., a huge developer, pegs the year-on-year gain at about 3. 1 percent. In the southern California market, home to the country’s largest seaport complex, rents are up nearly three times that, driven by huge demand for port-centric property as well as the need for more cross-dock space to handle the transloading of goods from marine containers to 53-foot boxes for movement inland via truck or rail intermodal service.

Vacancy rates nationwide in the third quarter dropped to 7. 2 percent, the lowest level in six years, according to JLL data. Vacancies in red-hot markets like the Lehigh Valley in central Pennsylvania have dipped below that, hitting levels not seen for a decade or more, according to Jake Terkanian, vice president of the global industrial services group at CBRE. Nationwide availability, which tracks current vacancies and space that will become available in the next six months, reached its lowest levels during the quarter since the first quarter of 2008, according to CBRE.

Nationwide net absorption, broadly defined as the
amount of occupied space less the amount of space vacat-
ed, hit 143.8 million square feet through the first nine

Industrial property business making a comeback

Freight broker Coyote Logistics LLC has hired C. Thomas Barnes, former head of Con-way Inc.’s multimodal unit, to lead its less-than-truckload (LTL) services operation.

… Plug Power Inc., an energy product provider, has
appointed Paul B. Middleton as its new chief finan-
cial officer. … Paul Laroia, vice presi-
dent of aftermarket for NACCO Materials
Handling Group, the parent company of
Hyster Co. and Yale Materials Handling
Corp., has announced plans to retire by
the end of the year. … Clark Material
Handling Co. has promoted Rob Smith to
dealer development manager. … WEPCO Inc., a material
handling systems integrator, has named Larry Strayhorn
president of the company. … Advanced Charging
Technologies, a provider of industrial and electric vehi-
cle battery chargers, has hired Jonathan Houston as its
Southwest sales director. … Jeff Brashares, senior vice
president of sales and national accounts for the Dallas-
based third-party logistics service provider (3PL) TTS LLC,
has been re-elected to the board of directors for the
Intermodal Association of North America
in the 3PL Division Seat. … Dean Stavraka
has joined the management team at
systems integrator SI Systems as direc-
tor of business development. … Sato, a
provider of bar-code printing, labeling,
and EPC/RFID solutions, has appointed

Yasuhiro Tanabe to facilitate Sato’s global expansion
and strengthen its presence in overseas markets. … UTi
Worldwide Inc., a global supply chain services company,
has promoted Hessel Verhage to president, freight for-
warding, the Americas, and Keith Pienaar to president,
contract logistics and distribution.
newsmakers
months, up 28. 5 percent from a year ago, JLL said. Vacancy
rates could fall to as low as 6. 9 percent in the seasonally
strong fourth quarter, when demand for space picks up
before the holidays, JLL said. By year’s end, net absorption
will reach, at minimum, 185 million square feet, up nearly
10 percent from a year ago, JLL said.

The anecdotes add fuel to the story. In the Lehigh Valley, there are no more 500,000-square-foot “big box” distribution centers on the market, according to Terkanian, who oversees the region for CBRE. In Bethlehem, Pa., Zulily, a fast-growing e-tailer, leased out all of the space in an 800,000-square-foot DC being built on spec about six months before construction was finished. Out west, Los Angeles has a 1.9-percent industrial vacancy rate, according to Newmark Grubb Knight Frank, a real estate services firm. About 2. 5 million square feet of space is under construction there.

California’s “Inland Empire,” where industrial rents are significantly cheaper than in and around the Los Angeles basin, has been on a multiyear roll as the DC conduit between imports off-loaded at the ports of Los Angeles and Long Beach and consumer markets across the West. Ironically, third-quarter vacancy rates have ticked up to 5 percent from 4. 8 percent in the prior quarter and 4. 6 percent in the year-ago period, according to Newmark data. That could be because of a minor oversupply condition due to the 12 million square feet under construction there.