DC Velocity - February 2016

The Federal Reserve’s December decision to raise interest rates should not slow capital flows into the thriving U.S. commercial property market—which includes warehouses and distribution centers—because solid economic fundamentals will prop up asset values and foreign demand for U.S. property will remain strong, said real estate giant CBRE Group Inc. in releasing its fourth-quarter analysis of the commercial sector.

The fourth-quarter “industrial availability” rate, which CBRE defines as the percentage of properties being marketed and available within a 12-month period for a tenant to make any interior modifications, hit 9. 4 percent in the fourth quarter, the Los Angeles-based firm said last month. This marks the 23rd consecutive quarter of falling availability in the industrial sector, the longest stretch since CBRE began tracking the national market in 1989, the company said.

Of 57 industrial markets that CBRE monitors, 35 report-
ed declining availability in the fourth quarter, CBRE
said. Detroit reported the most significant drop, with the
availability rate falling 120 basis points, or more than one
full percentage point, from the third quarter, CBRE said.
Dallas, New York, and Atlanta also reported significant
sequential declines, it said.

“The majority of markets continue to improve, and a few are even experiencing lower levels of available space than has been seen in decades,” said Jeffrey Havsy, Americas chief economist for CBRE. “Such constraints will continue to provide upward pressure on rent levels, as demand-side fundamentals remain quite favorable for industrial users.” Yet the marginally higher borrowing costs will not sidetrack an industry that is demonstrating steadily improving fundamentals, according to Havsy. “Commercial real estate remains in a ‘Goldilocks’ state, with both demand and supply neither too hot nor too cold,” Havsy said in a statement. “This slow, stable improvement is extremely healthy for the sector, but is at a pace that is sustainable for 2016.”

NAA-1078 ISS: 1/16

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UPS will triple the size of its

“Centennial” ground package sort-
ing facility in Louisville, Ky., and will
nearly double its package processing
rates. Separate from UPS’s Worldport
international air hub, this project
will cost an estimated $300 million
and should be substantially complet-
ed by 2018. … Dorner Mfg. Corp.
has completed its 25,000-square-foot
facility expansion in Hartland, Wis. …
Third-party logistics service provider
LoadDelivered is relocating its head-
quarters in March to 640 N. LaSalle St.
in downtown Chicago. … Americold
has purchased the Tradewater facility
in Atlanta, increasing the company’s
owned temperature-controlled stor-
age capacity in the Atlanta market
to more than 53 million cubic feet.
… Dayton Freight has opened a new
32-door service center in Memphis,
Tenn., to serve more cities in the
Midwest.
ground breakers
Higher interest rates shouldn’t sidetrack strong commercial
property market, CBRE says