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Monday, December 22, 2014

Houston Market Predictions: 2014 in Review

By: Rand Stephens (Houston)

In January of this year I posted a blog with my Houston predictions for 2014.  I wasn’t that far off!  Below is a recap.  Stay tuned for my 2015 predictions. 
Here were my predictions for 2014:

  • Prediction: 60,000 new jobs will be created
  • End of the year recap: The latest year-over-year job growth is 120,000 jobs (as of November).  I felt there would be a slowdown in the energy industry in 2014.  I am obviously off a year, but the drop in oil price does not shock me.  60,000 new jobs might be a better prediction for 2015.

  • Prediction: Rental rate growth in all class A properties will increase at slower rates than 2013 due to enough new inventory hitting the market to provide a rental rate cap on the high-end of the market.
  • End of the year recap: Right about this one.  Class A rates were $31.18 in 2012, $32.78 in 2013, and $34.34 as of 3Q14.  In 2013, rates grew by 5.13%.  In 2014, they have grown by 4.76%.  Class A rates have fallen slightly in the fourth quarter and will probably end the year around $34.20 which represents a growth rate of 4.33% for 2014.

  • Prediction: Rental rate growth in class B properties will be more substantial than class A as class B properties change hands, get upgraded and become more attractive to the user.
  • End of the year recap: Older buildings attempting to stay competitive through renovations was definitely a trend in 2014. Examples include 600 Jefferson, 800 Bell, Two Shell Plaza, Pennzoil Place and the Esperson building. Class B rate growth was 2.5% in 2013 and 3.88% in 2014 (as of 3Q).  While the rate of growth was not more substantial than Class A (3.88% for Class B vs. 4.76% for Class A), the rate of growth for Class B properties improved in 2014 while Class A’s decreased.

  • Prediction: Vacancy rates in the office market will go up slightly due to new inventory coming online and vacant space left behind as companies relocate to new buildings.
  • End of the year recap: Wrong on this one. Vacancy fell from 10.9% in 4Q13 to 10.3% in 3Q14.  It held steady at around 10.3% throughout 2014 but will increase a little in the fourth quarter to around 10.4-10.5%.

  • Prediction: Lenders in Houston will continue to be conservative with their underwriting of new development and acquisitions; this will insure ongoing fundamental stability in all product types.
  • End of the year recapTrue for the industrial and retail sectors. Multifamily apartments are questionable, although as we saw, condos have strong preleasing.  For office, preleasing was at 70-80% in 2013 and 55-60% in 2014. Speculative construction ground-breakings were about 1.5 msf in 2013 and 3.7 msf in 2014.  Most of the spec construction is in high-demand areas.  Given the low vacancy and high demand, lenders remained conservative in 2014.

  • Prediction:  Houston will continue to grow as a major center for the medical industry leveraging off of the Texas Medical Center’s growth and prominence as one of the top medical centers in the world.
  • End of the year recap: Yes!!! The Education and Health Services sector grew by 7.1% YOY second only to the energy industry which grew at 9.1%. According to Bill McKeon (EVP, COO & CSO at Texas Medical Center)- “We have assembled a highly talented group of individuals from across the medical center to shape the structure of the institutes that will position the Texas Medical Center as ‘the third coast’ for life science research, education, and innovation.”

  • Prediction:  The Port of Houston will grow more than expected due to infrastructure improvements, widening of the Panama Canal and logistical problems in other major US ports.
  • End of the year recap: Yes!!! The Port remains as the largest foreign trade port in the country after it surpassed New York in 2013.  The Port is currently conducting a $68 million expansion that will deepen the terminals from 40 to 45 feet due in part to the Panama Canal.  To speed up the channel dredge projects, the Port of Houston Authority bypassed the federal process and self-funded the projects through the port's operating revenues.

  • Prediction:  Houston Republican congressman, John Culberson, will take over the appropriations subcommittee that oversees the Johnson Space Center.  With Culberson’s appointment, the Johnson Space Center will start growing again and add unexpected job growth.
  • End of the year recap:Yes!!! The NASA/Clear Lake submarket has posted YTD positive absorption for the first time since 2010.  This year, Boeing was awarded a $4.2-billion contract by NASA to transport crews to the International Space Station.  Boeing is now hiring an initial 100 employees who will be based in the NASA/Clear Lake submarket.

Sunday, December 21, 2014

Strong National Demand and Shortage of New Construction Push Industrial Sale Volume and Pricing into 2015

by Erik Foster (Chicago)

The US outlook for industrial capital markets remains strong as we approach year-end.  The investor demand continues to outpace supply of assets coming to market. While we have seen a return of speculative construction in many of the major and secondary markets, it has not filled the void quickly enough from the leasing perspective as many markets are reaching historically low vacancy rates.

Among the key trends to look for in 2015 are:

  • Look for a three to seven percent increase in pricing for industrial assets in many markets nationally as supply continues to lag behind demand. While there is more than 100 million square feet of speculative construction underway in the top 30 markets nationally, there can be a 12 to 18 month lag time for construction, leasing and potential investment activity.  As the fourth quarter push in 2014 to get leases done will benefit the market overall, there is still significant demand from tenants.
  • There will be a sustained demand in secondary markets, such as Indianapolis, Columbus, Miami and Charlotte.  Trends such as this will continue to provide positive leasing, and consequently sales momentum, into 2015.  This is due to a shortage of core product and more favorable pricing in secondary markets.  Some of these markets, such as Seattle, are reaping aggressive pricing at peak levels, yet the development pipelines in some of these supply constrained markets will continue to push rents and per square foot prices past the historical market highs.
  • The growth in equity from Canada, South Korea, Germany, the United Kingdom and other Western European countries will continue at a brisk pace.  International investors are particularly focused on the U.S. market, as it offers tremendous stability and growth potential.  Given the different vehicles that are now available for investors to access the industrial marketplace from across the world, there will be sustained interest in US industrial product from capital sources that we have not historically seen.  More, and different, equity will continue to put demand side pressure on pricing keeping overall cap rates at, or in some markets beyond, current levels for the best product.  This demand will continue to keep upward pricing pressure on industrial assets in secondary markets as well.

Thursday, December 4, 2014

Dallas Real Estate Market Benefits from Job Growth

By Greg Langston (Dallas)

Healthy job growth is helping drive investment in the Dallas real estate market, with the office market in particular experiencing nation-leading expansion. This growth is driven by a significant number of corporate relocations and expansions, increasing the value of existing space while promoting additional development. Demand is expected to remain high for the remainder of 2014, but current construction projects are expected to be complete in 2015, freeing up additional space and relieving the tight demand.

These trends, and others, are explored in greater detail in Avison Young’s Dallas Office Market Monitor for the Third Quarter of 2014. Read the full report here.

The Dallas-Fort Worth market is experiencing steady job growth, with 101,500 jobs being added over the 12 months ending in August 2013. In fact, every economic sector--excluding manufacturing and information--has experienced employment gains over the period. As you might expect, these factors have also led to robust growth in single-family and multi-family construction and, ultimately, the Dallas office market.

We can connect this job growth to the significant number of corporate relocations and expansions in the market, with corporations like FedEx and Toyota expanding their D-FW holdings. Although Downtown Dallas remains a top market, we’re seeing marked growth in the suburbs, most notably North Dallas. All in all, there are over 7.4 million square feet of office space currently under construction, 70% of which is already pre-leased.

All of these factors have combined to make the Dallas office market one of the nation’s top performers. The market absorbed over 1.8 million square feet of space during the third quarter, bringing year-to-date absorption numbers above 2013’s final tally with months to go. Although vacancy is down and gross asking rates are up, we expect to see some relief in terms of asking rates once major construction projects are completed in 2015.

In summary, the Dallas office market has continued its trend of steady growth through the third quarter of 2014. Thanks is no small part due to favorable business conditions in the region--and the job growth that comes as a result--we can look forward to the next year with some degree of optimism.

Read the full Dallas Office Market Monitor for the Third Quarter of 2014. or send us an email to learn more.

Tuesday, November 4, 2014

Oil Prices and the effect on Houston Real Estate

By Rand Stephens (Houston)

The recent drop in oil prices followed by Goldman Sachs’ recent bearish report that prices will continue to fall, raises the hair on the back of the neck for those of us in the Houston real estate business who lived through the 1980s oil crash.

For those who are too young to know what I’m referring to with regards to the oil crash in the 80’s, further research is warranted on this topic, if nothing else, but to gain an appreciation for an epic economic collapse that epitomized the phrase “what goes up, most come down”.

The 80’s economic collapse in Houston was an economic tsunami of sorts, with a similar economic affect to what happened to the national economy in the Great Recession beginning in 2008, but without a government bailout.  However, since 1994, after paying for its economic sins in the 80’s with a massive purging of everything in excess, including jobs, the Houston economy has done nothing but go up.

Even during the Great Recession, the Houston economy barely skipped a beat.  Of course, it is important to point out that oil prices were very stable during the Great Recession, which is the major reason the Houston economy didn’t falter.  Prior to the Great Recession, oil prices peaked at $145/barrel, fell to $35/barrel in April of 2009 and then quickly recovered to the $90-$100/barrel range, where they’ve been until now.

I think it is safe to say, that if the price of oil had stayed at $35/barrel in 2009 instead of quickly recovering to the $90-$100 range, the Houston economy would not have enjoyed the same robust growth that it has seen over the last 5 years.

However, since the bust in the 80’s, Houston has weaned itself from excess debt.  So, while negative job growth is a killer for any economy, Houston has proved to be very resilient because, in general, everything is much better capitalized.   

At the beginning of this year, I blogged my predictions for 2014.   One of my predictions was that Houston job growth would slow to around 60,000 jobs.  Well, the trailing 12-month job growth in Houston is 107,000.  Unless something happens drastically in the next two months, I’m going to be very wrong about this prediction.  But the top economists who follow Houston are also going to be very wrong, since they predicted a slowdown in Houston job growth as well.  So, I guess that puts me in good company!

The bottom-line is, no one knows what is going to happen with Houston job growth, or oil prices, including Goldman Sachs.  However, I do sleep better at night knowing these important things about Houston:
  • Houston is the energy capital of the world, and the industry’s intellectual and financial resources continue to move to Houston.
  • The City’s real estate fundamentals are strong and new projects are being well conceived and well capitalized (view the latest 3Q office report here).
  • Houston still has a low cost of living compared to other major markets, it is culturally diverse and is filled with hard working nice people.

What does all this mean for Houston real estate?  I think it bodes well.  No doubt if oil prices continue to drop it will have an effect on job growth, however, Houston is fundamentally sound and is well positioned to handle whatever comes its way.

Thursday, October 30, 2014

Giving back: A day spent volunteering at the Dallas Children’s Advocacy Center

By Kathryn Young (Dallas)

On October 9, 2014, Avison Young’s Dallas-based employees were reminded of the importance of giving back to the community.

As part of the firm’s first-ever Global Day of Giving, we proudly partnered with the Dallas Children’s Advocacy Center (DCAC), and spent the day assisting the charitable organization’s staff in the outstanding services they provide for child victims of tragic circumstances. Avison Young’s Global Day of Giving involved employees in all of the firm’s 60 offices in Canada, the U.S. and Europe. Each Avison Young office chose a local charity with which to volunteer. The Global Day of Giving will be held annually in October in all Avison Young markets and continually expand as the company opens new offices around the globe.

In Dallas, we chose the DCAC as our 2014 charity based on a recommendation from David Cooke, a Principal based in Avison Young’s Dallas office – and for good reason.

Nearly 3,000 children – a staggering number – walked through DCAC in 2014. These children are victims of extreme cases of domestic violence and/or sexual abuse. On average, the victim is a girl, aged nine or ten, who has been sexually abused by someone she knows and trusts. These children arrive by way of Child Protective Services, the Dallas Police Department, one of the 25 other police departments in Dallas County, or a hospital. Sometimes, they are brought straight from school, with no time to pack clothes or items that they would miss terribly, like a special teddy bear.

The DCAC provides these young victims with a warm, child-friendly environment to help buffer their emotional pain. Through loving donations, the children are given toys, stuffed animals, clothes, school supplies, and essential day-to-day items. There are several therapy rooms where children are provided with art, music, play, and even animal-assisted therapy.

One of these therapy rooms has a doll house version of a courtroom, with dolls playing the roles of lawyers, jurors and judge. In a better world, there would be no need for such a toy, but here, there is. While it is sad that such a toy should exist, it can do a great deal to help these innocent children, victims of unthinkable crimes who are too young to understand the court system. This toy is used to help them prepare for court, where they will have to face their perpetrator, a scary prospect for a child to imagine.

We noticed many beautiful quilts, stacked on shelves in the Clothes Closet, hanging on walls as decoration, or laid on sofas in waiting rooms. Erin Bannister, Director of Operations at DCAC, told us that they were all handmade by the Quilters Guild of Dallas. Erin said the guild had donated hundreds of quilts. These quilts gave a warm feeling of comfort, a very nice touch. Each quilt is a loving donation by the women of the Quilters Guild.

We worked in the Clothes Closet, directed by Becky Aguilar, Volunteer Coordinator at the DCAC, organizing donations and loading shelves with containers of children’s clothing, toiletries, diapers, and brand new toys. We were told that the teenage victims’ group needed more donations, and DCAC staff suggested art sets, sketchbooks and drawing supplies. We also worked in the visitation rooms, cleaning tables and chairs, and cleaned all of the children’s toys and placed them back in the dollhouses and toy trunks.

While it is tragic that such a place is necessary, we all felt that our day was well spent, and several of us mentioned that we would like to volunteer our services to the DCAC again.

Our thanks to the unselfish staff and volunteers at the Dallas Children’s Advocacy Center for what they do and for allowing us to be a part of the healing process – now, and in the future.

(Kathryn Young is a Client Services Coordinator based in Avison Young’s Dallas office.)

Monday, October 13, 2014

Industrial Development: A Key Contributor to the Commercial Real Estate Recovery

By: Rand Stephens

U.S. manufacturing is thriving again, returning the demand for industrial space to pre-recession levels. The U.S. industrial sector is leading the commercial real estate recovery with historically low vacancy rates and expanding speculative construction. Developers are far more disciplined than the prior cycle and the portion of speculative development has only recently become more in line with a healthy real estate market. Given current demand, it does not appear that rents will peak or experience a correction anytime soon even with new speculative deliveries. So, what is driving industrial real estate development?

Industrial production, which correlates highly with industrial demand, rose to a record level at the end of 2013 and continues to advance through 2014. As manufacturing sciences progress and consumers expect a quicker delivery of products, warehouses and distribution centers are adapting which translates to renovating existing structures as well as new construction.

In the Houston market, the expansion of oil and gas manufacturing and equipment storage facilities has always driven the city’s industrial market. Current events in the Middle East have created a renewed focus on domestic energy production as well as, potentially, the export of energy commodities thus cementing the demand for industrial space. Apart from energy exports, the market for industrial space near the Port of Houston is being further strengthened by the expansion of the Panama Canal in 2015. 

Houston’s overall industrial vacancy rate decreased in the third quarter, landing at 4.5 percent. The outlook for the remainder of 2014 continues to look good for industrial development, with strong year-over-year growth.

Friday, October 10, 2014

Fall 2014 Canada, U.S. and U.K. Commercial Real Estate Investment Review

By Mark E. Rose (Toronto)

Dispositions continue to drive healthy investment levels in most Canadian markets, while the lack of quality product being offered for sale masks investors’ true demand for acquisitions. This situation has prompted some Canadian investors to deploy capital to other countries – especially the U.S., where some markets are seen as being undervalued. In the U.S., improving leasing fundamentals have led to a robust investment environment with sales performance either on par with, or up from, one year ago.

These are some of the key trends noted in Avison Young’s Fall 2014 Canada, U.S. and U.K. Commercial Real Estate Investment Review, released today. You can read the full report here:

The report covers commercial real estate investment conditions in 29 regions: Calgary, Edmonton, Montreal, Ottawa, Toronto, Vancouver, Atlanta, Austin, Boston, Chicago, Columbus, Dallas, Denver, Houston, Las Vegas, Los Angeles, New Jersey, New York, Orange County, Philadelphia, Pittsburgh, Raleigh-Durham, San Diego County, San Francisco, San Mateo, South Florida, Tampa, Washington, DC and London, U.K.

We are seeing stable-to-increasing investment deal velocity, more so in the U.S. than in Canada, because of the pricing differential – although it’s narrowing for core assets in primary markets. I believe that we are at a short-term pricing top in Canada with bigger deals being fewer and farther between.

However, given the compressed yield environment to date, I believe the next wave of deals will more than likely be spurred on by rising interest rates, forcing some over-leveraged owners to sell, while others will find that buyers can’t pay what they used to. With all that anxious surplus capital and limited supply, I think there is sufficient pent-up demand in Canada, with a variety of investors waiting to get in at slightly better pricing. This will ultimately result in a re-pricing of commercial real estate assets.

Investment sales activity in the U.S. continues to benefit from the continued recovery in the economy and improving leasing fundamentals. By and large, office building dispositions drove investment dollar volume in the first half of 2014 to the tune of $38 billion (USD) – a result of improving employment levels and rising rental rates.

Monday, September 22, 2014

Canadian Grocery Wars

by Amy Erixon, Toronto

In September 2013, Loblaws and Metro, two of Canada’s three largest Grocers, announced comfortable single digit increases in revenues accompanied by a shocking 40% decline in net profits.  Both of these chains had recently commenced restructuring/repricing programs designed to blunt the erosion of market share from the onslaught of American retailers, recognizing the risk that matters could soon get a whole lot worse.   Nova Scotia based Sobey’s, the #2 Canadian chain, had just completed acquisition of Safeway Canada’s 200 western Canadian stores, and reported a respectable high single digit growth in both same store revenues and profits, while anticipating cost savings synergies from the acquisition.   But its shares fell just like the others; approximately 6% on these announcements.    Later that same month Amazon announced it would begin rolling out on-line groceries in Canada in 2014 (Amazon enjoys a 2.5% share of the US grocery market) and shares fell again – in the background was more bad news - Target was scheduled to open an initial 124 stores across Canada beginning in Q2, 2014.

Wal-Mart’s response to these market changes was to redouble its expansion plans (delivering some 60 new superstores across Canada in 2014 with an additional 35 planned for 2015, bringing its store count to 430) while concurrently ramping up its on-line grocery service to include some 2000 items (Amazon now delivers over 15,000).  Grocery e-commerce in Canada currently represents less than 1% of total sales, but is growing rapidly as more providers add offerings.  Wal-Mart has a third leg to its strategy (yet to be seen in Canada);  small footprint urban “green” grocery stores comprising 12,000-18,000 sf, featuring broad day-lighting, organic produce and super energy efficient building construction and operating systems.  These stores have been wildly successful in the pilot U.S. markets.   Wal-Mart is currently petitioning the City of Vancouver to build Canada’s first Net-Zero store in this format (so far the Vancouver planning department isn’t biting).

Fast forward to September 2014 and a high octane offensive and defensive battle is evident.  Not broadly publicized, but very quickly growing Quebec based Dollarama expanded its footprint from 800 to 880 stores in Ontario and Quebec this year and has plans to add an additional 400 stores over the next few years as it moves into Central and Western Canada.   (Not surprisingly, Dollarama together with its counterparts Dollar Store and Dollar Tree are also the fastest growing format south of the border.)  Costco, another American discounter, reported earnings this week.  Canadian division profits increased 18% on 14% higher same store sales and Costco announced it is planning to add 85 stores to its 110 store Canadian footprint, including 25 next year.   Target, the most recent American entrant, is not enjoying the same success.  Although it continues to struggle with logistics and maintaining stock in its far-flung store network, last week contrary to market expectations, Target announced it will expand by constructing 34 more stores in Canada in 2015, bringing its total to nearly 160. 

Canada’s first American player, Safeway, has been struggling on both sides of the border.  Following a series of well publicized labor disputes and market positioning difficulties, Safeway began capitulating last year - closing 72 of its Chicago area Dominick’s stores, and selling its 200 store footprint in Canada to Sobey’s in a transaction valued at $5.4 billion.    A year earlier Sobeys acquired 236 retail gas stations in Quebec and Atlantic Canada with proceeds from sale of Empire Theatres chain to Century Theatres, narrowing its focus on business lines synergistic with food and drug offerings. 

Sobey’s, founded in Nova Scotia in 1907, is now 100% owned by conglomerate Empire Holdings, TSX:EMP-A.TO, whose retail roots are Lawtons Drug Stores Limited.  Empire expanded into groceries in 1981 with the acquisition of Sobey’s and this combination has so far, been the home country winner - and the company appears to be the industry’s strategic leader.  In 1964 Sobey’s organized its real estate holdings in a separate holding company and became an active shopping center developer.  It was able to IPO the property company, Crombie, in 2006 as a REIT, TSX:CRR.UN. Empire still holds 40%+ of the Crombie shares.   In 2004 Sobey’s acquired a 72 store discount chain for $61 million and launched a successful brand in this segment.  In 2013 to capitalize on the rising “foodie” movement, Sobey’s formed an association with renown Canadian Chef, Jamie Oliver to enhance food education in its stores and promote what he refers to as a “fresh food revolution”.  Oliver hosts a popular CBC TV series, and is author of a number of award winning cookbooks.   Consistent with these market leading decisions, on September 10, 2014 Sobey’s announced continued strong results, with same store sales rising 1.3% - and thanks to the Safeway acquisition synergies being realized, revenues were up 35%, and earnings rose 46.8%.   

In July, 2013 Toronto based Loblaws, Canada’s largest grocer, successfully IPO’d 415 of its 2300 Corporate owned stores into a publicly traded Real Estate Investment Trust TSX:CHP.UN, in a transaction valued at $7 billion (Loblaws also operates 4,700 independently owned grocery stores).  In April of this year Loblaw’s, announced a $12.6 billion take-over of Shopper’s Drug, also Canada’s largest with over 1300 pharmacies.   This summer Loblaws rolled-out an e-commerce platform with the unique feature that you can order groceries on-line and pick them up at your local drug store if that is more convenient than the superstore location.  But below the surface Loblaws continues to show signs of trouble.  On July 17 Galen Westin, heir to the company, announced the third management shakeup in as many years, including personally taking the helm as its President as well as Executive Chairman.  Anticipated synergies are not to be found and several top executives at Shoppers Drug announced their departure as the company announced a second quarter loss of $456 million, as compared to earnings of $116 million for the same quarter a year earlier (which were down 40% from 2012).  The grocer noted that Shoppers added 40% more revenue and same store sales were up 1.6%, signaling that corporate restructuring at Loblaws is far from over.    In the most recent Analyst call Mr. Westin noted that the chain is looking to upscale its offerings including more fresh and pre-prepared offerings.

Meanwhile Quebec based Metro, which acquired Canada’s #4 Grocer A&P in a $1.7 billion transaction back in 2005 was at that time already in the drug store business, operating 573 grocery stores and 256 drug stores under 11 brands.  In 2008  Metro undertook a rebranding and retrofit program to unify the store layouts and format to 2 distinctive brands, both catering to the discount end of the market.   Metro same store sales were up nearly 2% year over year, but earnings were flat due to “extreme pricing pressure”, according to the CFO on a recent analyst call. 

Grocery store wars are far from new.  Between 1927 and 2005, 31 grocery chains went out of business in Canada.   What many Canadians don’t know is that for the last 5 years in the US grocery stores have been the most rapidly shrinking segment of the retail scene.   The grocery business, like all of retailing today is feeling the pinch of rising income inequality (with all growth at the top and bottom ends of the price scale), changing formats (buy local, fresh, and on-line) and growing store oversupply.   

In my affluent suburban Toronto neighborhood, every single grocery store (including the 3 privately owned and operated organic specialty stores) is undergoing a facelift, while the local retailer association together with a lot of support from the neighbors has redoubled efforts to keep Target, Costco and WalMart more than 5 miles away, north of the QEW.   My local stores are beginning to offer cooking classes, recipes in the aisles and are beginning to install energy efficient enclosed refrigerated units.   Competition is rising and change is evident everywhere. 


Friday, September 12, 2014

Mid-Year Industrial Momentum Will Continue

by Erik Foster (Chicago)

Investors have been on a buying spree in the industrial sector nationally for a number of reasons.  Many are drawn by the potential for income stability and by the long-term growth trends given the positive macroeconomic outlook for distribution facilities, as well as tempered spec development keeping rental growth on it's positive pace.  According to Avison Young’s review of data from the past two years, investment in industrial assets across the United States rose 55 percent since mid-year 2012, from $15 billion to $23 billion.

The West region continued to see the majority of activity, moving from $5.2 billion in investments at mid-year 2012 to approximately $6.6 million in 2014, according to research from Real Capital Analytics.

The gains from 2013 were particularly strong in secondary markets such as San Diego (260% increase), Orlando (202% increase), Indianapolis (138% increase), Memphis (125% increase) Atlanta (96% increase) and Charlotte (90% increase). Investors are moving into these and other secondary markets as activity, and pricing, is peaking in core markets.

The mid-year statistics also showed that the Midwest was a steady performer. It was the only region to experience gains in each period, moving from 15.1 percent of activity in 2012 to 16.4 percent in 2013 to 16.5 percent in 2014. This is not surprising, as recoveries always come later to the Central U.S.

The Southeast region was the most volatile during that time period, moving from the second most active region in 2012 to fifth in 2013 and back to second again in 2014. Markets with the greatest declines in sales activity from mid-year 2013 to mid-year 2014 were Miami, 71 percent; Eastern Pennsylvania, 56 percent; and Baltimore, 50 percent.

For the remainder of the year, look for continued strong demand from investors for all classes of industrial assets, core, core-plus and value add.  Also, look for new players to be arriving on the acquisition scene, it is not the same old cast of characters; the global marketplace is taking a very strong interest in industrial assets.

The postings on this site are those of the bloggers and do not necessarily represent the views or opinions of Avison Young.