We would like to thank everyone that has replied and commented on our recent newsletters. The purpose of these newsletters is to bring an opinion to the market and not just reiterate the sea of sameness coming from leading news sources. In response to many of our readers; this week we plan to shed some positive light on the market. Many of us may feel like this gentleman pictured below however now is not the time to grab a cardboard sign. We are seeing positive market data being released and plan on seeing some great buying opportunities coming later this year. There is $1.4 Trillion of debt coming due through 2014 and there will be opportunities for patient and liquid buyers. Relationships are going to be key as new product is delivered to market. Brokers, special servicers and a great staff will make for a perfect recipe in the coming market.
The below article from the AP points out that we are seeing some recovery in the market through some great indicators. Numbers that the Los Angeles and Long Beach Port traffic is up 28% from February 2010, unemployment is down from 10.2-9.7% from last month, short term deals are up as landlords are trying to keep their tenants in place with new 2-3 year deals, and demand for warehouse and manufacturing space has been re-ignited. This kind of news is exactly what some of us need to sleep a little better at night and remain opportunistic.
Even though we might not have reached the bottom of this cycle; we feel that the dust is settling and with the amount of transactions up, unemployment down and tenants being able to reach a common number with landlords, we are in a much better place than 6-9 months ago.
Port traffic is a key component to life coming back to market. Increasing port traffic directly correlates to a demand for warehouse space and a need for distribution which in turn outlines that consumers are purchasing goods and in conclusion, employment must be increasing so the employed people want and can purchase these goods that come from the containers.
This article was a great read and definitely was able to shed a little bit of positive light on the current market.
In closing, we feel that jobs will continue to be the key to a recovery and stabilizing consumer confidence.
LOS ANGELES (AP) — “After one of the worst years in decades, the industrial property market is slowly regaining its footing.
Companies are beginning to stock up on goods again after holding back the last two years during the recession. Exports are up and manufacturing activity jumped last month to the fastest pace in more than five years.
That’s helped re-ignite demand for warehouse and manufacturing space, particularly around major seaports and other trade hubs. Companies such as The Procter & Gamble Co., Williams-Sonoma Inc., and Kraft Foods Inc., have signed new leases in recent months for industrial properties.
The trend is a good sign for the economy because it signals executives are more optimistic about their business prospects. And when companies expand, they often increase hiring.
The pickup in leasing activity, which started in late summer, should begin to reduce the industrial vacancy rate and stem rent declines by early next year, experts say.
Major cargo hubs like Los Angeles, Seattle, Kansas City, Houston and Dallas are expected to bounce out of the slump faster than other markets. While Phoenix, Chicago and Detroit are among the cities projected to lag.
”The worst has passed,” says Craig Meyer, a managing director for Jones Lang LaSalle in El Segundo, Calif. ”We’re clearly at the bottom looking up.”
The U.S. vacancy rate for industrial properties hit 10.3 percent at the end of last year, according to the real estate services company. Other firms, such as Grubb & Ellis, peg it slightly higher at 10.7 percent.”