The industrial market has been running strong for several years, bringing record leasing, construction, and sales volume across many U.S. markets. As 2017 winds down, there is much talk about what lies ahead for 2018. Will investors continue to turn to this investment sector at a steady pace? The answer, according to the recent Real Capital Markets/SIOR Industrial Sentiment Report, is a resounding yes.
The industrial sector continues to draw a wide range of investors, due to its stability and the potential for long-term growth, says Steve Shanahan, Executive Managing Director, RCM. This strong activity should continue for the next 12 to 18 months, according to survey respondents, who included investors and brokers representing a cross section of markets and investment price levels.
Here are 5 Key take-aways from the report:
- 3% of investors and brokers across the country say investment levels will at least stay the same going into 2018, with many predicting a slight increase in activity.
- E-commerce is having the greatest impact on market activity, but is not the only factor driving industrial activity. Other key contributors include the comeback of the auto industry and the “onshoring” of industrial manufacturing back to the U.S.
- Investment sales pricing is expected to stay the same (92.7% of respondents) or rise by 5% or more going into 2018 (33.8% of respondents).
- 6% of investors say that overbuilding is the greatest threat to the industrial market.
- The most favored new product type is the mid-size, modern, multi-tenant building (35.8% of respondents)
This current industrial market is unique in its longevity — and the array of market fundaments that are propelling activity. With growth in the supply chain, corporate distribution space realignment, and the continued expansion of e-commerce, it’s difficult to see an end in sight for industrial investment.