E-Commerce Demand Drives Major Valuation Increases for Houston Warehouse Properties

Written on April 17, 2018 at 10:56 AM

By Amanda Moore, Managing Consultant, Houston

Harris County, Texas has released the vast majority of their 2018 notice values for commercial real estate. They’ve come out especially strong in the industrial sector with warehouse properties seeing a 12% increase over the 2017 certified values and a 6% increase over the 2017 noticed values.

Harris County says Houston is becoming an “industrial hub” due to the rapid growth in e-commerce driving high demand. The county points to flat vacancy rates at 5% and increasing asking rental rates to support their position on the warehouse market. Of the 6.4 million SF of warehouse product under construction, 29.3% is pre-leased. The price at which warehouse product is trading is also increasing - $77 PSF vs. $67 PSF in the prior year. Port of Houston is emerging as a key national distribution region, further fueling the fire for increasing warehouse values with decreasing cap rates YOY. 

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Categories: Distribution Centers, Industrial, Real Property, Paradigm Info, Texas, Warehouse

Managing a Decade of Increasing Property Taxes in the Dallas-Fort Worth Industrial Market

Written on March 06, 2018 at 12:49 PM

By Carlos Villatoro, Senior Managing Consultant, Dallas

A prominent national industrial REIT client recently asked for a historical summary of property taxes for a distribution warehouse they were considering purchasing. We were alarmed to see the property had experienced seven consecutive years of significant increases and had already budgeted for another increase in the upcoming year. Unfortunately, this trend is not specific to that one property alone. By 2020, I will not be surprised if we will have seen a decade of continual property tax increases for nearly all industrial properties across the Dallas-Fort Worth (DFW) area. In order to minimize and manage these increases as much as possible, it’s crucial to understand why and how they are happening in the first place.

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Categories: Distribution Centers, Industrial, Real Property, Paradigm Info, Texas, Warehouse

U.S. Industrial Vacancy Hits 17-Year Low

Written on June 26, 2017 at 04:22 PM

As sales by internet retailers grow and drive demand, U.S. warehouses are becoming more costly and harder to come by.  Nationwide, the industrial vacancy rate is 5.3 percent, a 17-year low, according to JOC.com's data hub. E-commerce fulfillment is a big reason why the demand for warehouses and distribution centers has increased of late, Jones Lang LaSalle says, representing about 40 percent of the leasing of industrial properties today.

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Categories: Distribution Centers, Industrial, Retail

Retail Experts Remain Optimistic on Impact of Amazon-Whole Foods Deal

Written on June 20, 2017 at 01:52 PM

The proposed $13.7 billion acquisition of organic grocery retailer Whole Foods Market by e-commerce giant Amazon holds the potential to cause some major disruption in the grocery industry, but experts say retail real estate investors should remain optimistic. Experts predict Amazon will use the Whole Foods stores, in part, as hubs for grocery pick-up and delivery, helping Amazon resolve the “last mile” dilemma of how to get products from local shipping hubs to nearby customers. Amazon is also likely to improve efficiency at Whole Foods’ distribution centers by incorporating their technology. Experts say the Amazon-Whole Foods deal presents an opportunity for retail real estate investors, but grocers will need to adapt to the new environment and accelerate their growth strategies in order to remain competitive.

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Categories: Distribution Centers, Retail

Industrial Sector Posts Record-Breaking Performance

Written on March 06, 2017 at 10:26 AM

Continued growth in e-commerce has driven industrial vacancy to an all-time low, declining by 70 basis points from a year ago to an aggregate nationwide vacancy of 5.6 percent in the fourth quarter of 2016, according to the year-end industrial market report from real estate services firm JLL. JLL researcher Aaron Ahlburn says that the former record low vacancy was in 2000, when the rate dipped to a 7.0-8.0 percent range as a result of market expansion coming out of the dot.com bubble. Increasing competition for industrial space has caused rental rates to hit record highs, breaking the $5 per sq. ft. triple-net barrier for the first time, Ahlburn notes, and has set off a building boom.

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Categories: Distribution Centers, Pennsylvania, Industrial, Real Property, Indiana, Illinois, Ohio, Warehouse

NREI: Six Property Types Strong Enough to Thrive in a Recession

Written on November 15, 2016 at 04:03 PM

For some time now, the industry has been mulling when the commercial real estate cycle’s historically-long recovery will end and an economic downturn will begin.  By the end of 2018, the economic model created by research firm CoStar Portfolio Strategy predicts an 80 percent chance of a recession, says Rene Circ, director of research at CoStar Portfolio Strategy. Circ points to variables, such as the unemployment rate nearing full employment and business investments down, that are flattening the yield curve and pointing to a recession. Circ also cautions that the Federal Reserve raising interest rates will be a negative to the yield curve. Although the next recession is expected to be milder, the National Real Estate Investor took a look at what asset types are better positioned than others to weather an economic downturn.

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Categories: Distribution Centers, Industrial, Real Property, Retail, Warehouse, Self Storage, Medical

Benefits of Industrial Property Owners Going Green

Written on May 31, 2016 at 04:01 PM

Building green industrial properties, and seeking LEED certification, is a growing trend for developers and property owners, as they begin to recognize the wide-range of benefits it provides for themselves and tenants alike.  According to the U.S. Green Building Council, as of 2013 a total of 117 industrial manufacturing facilities had earned LEED certification. These buildings accounted for 41 million gross square feet of green industrial space. An additional 703 industrial projects had registered for LEED certification as of 2013, buildings that totaled 221 million square feet. The U.S. Green Building Council said that the market of green industrial buildings had grown by 375 percent in the four years leading up to 2013.

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Categories: Distribution Centers, Industrial, Real Property, Industrial & Manufacturing, Green Initiatives, Warehouse

Industrial Tenants Favor New, Modern Properties

Written on April 25, 2016 at 04:56 PM

The U.S. industrial market has been performing better than ever. Occupancy hit its highest point in 30 years during the first quarter of 2016, and 57.8 million sq. ft. of space was absorbed, up 9.3 percent from the same period a year ago, according to a report from Cushman & Wakefield. Rents have followed the upward occupancy trajectory, increasing 5.3 percent in 2015. Although industrial experts predict rent and occupancy increases will moderate during 2016-17, due to a rise in new construction, an interesting dynamic to note is that tenants signing new leases are gravitating to newer properties that have been built to meet modern requirements. According to JLL, 78 percent of U.S. industrial net absorption activity in the first quarter was dominated by move-ins to facilities that were built in the past 27 months.

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Categories: Distribution Centers, Industrial, Real Property, Warehouse

Economic Development Fuels Northern Nevada Commercial Real Estate Market

Written on April 18, 2016 at 04:48 PM

After going through one of the toughest recessions in its history, Northern Nevada’s commercial real estate market suffered greatly as rising vacancies crushed new construction activity and speculative building. The region’s commercial real estate sector is in the midst of a comeback, however, thanks to several economic development victories over the past few years causing a rising tide effect.  Major projects, such as the Tesla Motors Gigafactory, Switch Supernap Tahoe Reno Industrial Campus and Rackspace Data Center, helped legitimize Reno as a viable area for industry and technology, said Ted Stoever, vice president of land and investment for Colliers International’s Reno office. Ultimately, these projects are driving job creation opportunities and all the ancillary businesses that go with that.

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Categories: Distribution Centers, Office, Nevada, Industrial, Real Property, Industrial & Manufacturing, Retail, Data Centers, Warehouse

Logistics Property Values, Rents Expected to Peak in 2016

Written on February 12, 2016 at 03:19 PM

As the U.S. logistics industry flourishes from an improving economy and increased demand for space from e-commerce companies, it continues to reach record highs in occupancy and absorption. In fact, the logistics property sector expects to see a 23 percent increase in sales this year, according to a recent report from commercial real estate services firm CBRE. Global online sales will grow to $3.5 trillion by 2019, the company said, pushing demand for industrial properties toward mid-sized and big-box distribution centers located close to major population centers. However, industry experts predict the industrial space supply and demand will reach equilibrium by the end of 2016.

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Categories: Distribution Centers, Industrial, Warehouse

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