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Thursday, April 25, 2013

Industrial Class B Investment Market Recovery

By Erik Foster (Chicago)

Many Class A/Core industrial properties have traded in recent years, and we have been fortunate enough to be part of many of these transactions.  The shortage of new construction and continued investor appetite for stable returns is opening the door to a wider pool of assets which are attracting investors attention; the Class B industrial market.  The data continues to point to a national recovery in the industrial real estate sector, yet some investors across the country are shifting away from a focus on Class A buildings toward the Class B market as pricing for A properties becomes out of reach and availability to purchase these assets become scarce.  As a result, B industrial assets—which have in the near term been overlooked by institutional investors—will see increased activity from a wider pool of investors in 2013 as both debt and equity demand continue.

Furthermore, the industrial market is giving the multi-family sector a run for its money as the preferred investment vehicle for institutional investors. This is due to historically steady cash flows, low capital/tenant improvement expenditures, and positive macro-economic occupancy drivers.

We delve further into these subjects, provide some predictive points and data in our most recent white paper.

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