Q1 Industrial Trends show Vacancy Rates remain in Decline

Reis Reports Q1 2013 Industrial Trends written by Kevin Friedman.

Here are some significant and noteworthy trends from the Industrial sector of commercial real estate in the first quarter of 2013, as explained by Dr. Victor Calanog, VP of Economics and Research at ReisReports.

* Industrial property vacancy rates remained in decline in the first quarter of 2013, but the rate of decline slowed down (0.2% decline from a decline of 0.3% to 0.4% in 2012).  Dr. Calanog believes that this is a result of confusion over the level of economic growth seen in the 4th quarter of 2012.  Industrial property vacancy rates generally follow the overall economic growth rate.

* The Panama Canal is set to open in 2015, and it should completely change the entire industrial property sector.  When the effects of the Canal are realized, super container ships will have the ability to ship to the east coast, where the ports are in greater proximity to the majority of the population.

* Growth in the online sales industry is fueling a boom in warehouse and distribution centers.  According to Dr. Calanog, this is likely causing the recovery of warehouse and distribution properties to be speedier than flex and research & development properties.

All in all, the industrial sector continues to recover, although this recovery has slowed compared to its rate in 2012.  This recovery is stronger than the office sector because industrial properties generally react to global economic trends, while, in comparison, the office sector generally reacts to domestic trends.  The Panama Canal and online shopping has completely changed the landscape of the industrial properties sector.