Recovery in U.S. Warehouse Leasing Gaining Speed
27 Jan 2011 |
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CoStar’s Positive Industrial Outlook Comes As Commerial Real Estate Market Learns of Possible Mega-Merger Between Two Largest Warehouse REITs
By Randyl Drummer
January 26, 2011
Warehouse leasing accelerated sharply in fourth-quarter 2010, helping to drive down vacancy rates amid record-low deliveries of new industrial commercial properties last year, according to CoStar’s Year-End 2010 Industrial Review and Outlook.
“We saw good, stronger demand in the fourth quarter, given the historic low levels of warehouse supply,” said CoStar Senior Director of Research and Analytics Jay Spivey. “That will eventually translate into higher rents. The story here is pretty good.”
Spivey, along with Hans Nordby, director of advisory services for Washington, D.C.-based CoStar, and real estate economist Shaw Lupton presented the year-end warehouse report and forecast during a Wednesday webinar for CoStar clients.
The positive market outlook comes just as two global owners and developers of warehouse and distribution space may be close to merging. In breaking news first reported late Wednesday by The Wall Street Journal on its website, Denver-based ProLogis (NYSE: PLD) and San Francisco-based AMB Property (NYSE: AMB) confirmed that they are in active discussions over a “potential merger of equals” in which the two companies would combine in an all-stock, at-market transaction in what would be one of the largest combinations of publicly traded real-estate companies. These two global industrial property giants have a combined market capitalization of nearly $14 billion.
Denver-based ProLogis, which has been working to reduce debt, pulled off the largest sale of industrial property of 2010, trading a portfolio of 182 properties in 19 states to private-equity giant Blackstone Group for $1.01 billion.
LEASING DEMAND INCREASES
The national industrial market logged 29 million square feet of positive net absorption in the fourth quarter, a noticeable spike upward from 11 million square feet and 10 million square feet in the third and second quarters, respectively.
The three months ending Dec. 31 was the third consecutive quarter of positive absorption since occupiers gave back 17 million square feet of negative absorption in first-quarter 2010, according to CoStar data. That was the last of six straight quarters of negative absorption dating back to early 2008.
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