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Blaine Kelley

Despite strong inventory replenishment and supply chain restocking, industrial real estate markets languished in 2010 and show only weak signs of growth as 2011 begins. Much of the growth simply went to refill existing, underutilized distribution centers across North America and left the national availability rate around 14 percent, a 10-year high. There were some bright spots as food and consumer goods companies made significant investments in new distribution centers through network optimization.

We expect to see two major changes:

  • Third-party logistics providers will see a significant uptick in activity, especially in transloading, as shippers will transfer seasonal needs and defer long-term capital investment in new facilities.
  • The competition for post-Panamax cargoes will intensify, especially in the South Atlantic. It’s too early to know the impact on demand and whether this will fill empty warehouses.

We expect the industrial real estate market to continue a slow, nominal recovery this year. There is still caution in the air, as the industry mirrors overall economic growth and is just beginning to find its footing from the corrections of the last three years.