A review of the Chicago industrial investment market was the topic of conversation at the January 2013 meeting of the Association of Industrial Real Estate Brokers (AIRE). The consensus of the AIRE gathering was that 2013 will be a very healthy year for investing in industrial property, in Chicago and across the country.
The AIRE program included the following high points:
- It will be a strong, “red hot” year for investment activity, perhaps reaching as high as $2 billion of activity in 2013 (up from just less than $1.5 billion in 2012);
- Today’s debt market remains very attractive, helping to buoy market activity;
- The high volume of capital chasing core product likely will force buyers to secondary and tertiary markets in the Midwest including Indianapolis, Kansas City and Minneapolis;
- Increasingly, speculative construction will return to a number of supply-constricted markets — both submarkets in the Chicago metropolitan area and in markets across the country;
- The addition of speculative construction — even just the potential for it — should create upward pressure on rental rates in certain market areas;
- In increasing numbers, those with capital to invest are looking to place it in industrial, a category that is underweighted;
- Institutional buyers will remain focused on stabilized product, but begin to take a closer look at value-add opportunities as the year moves along;
- As the availability of class A properties diminishes one of the interesting decisions facing investors will be do they want to own class B property in Chicago, or class A product in a secondary market (certain investors will prefer to own a critical mass of class A product in a secondary market).
The discussion on the state of the industrial investment market featured Ken Szady, Newmark Grubb Knight Frank; Stephanie Park, CBRE; and Peter Harwood, Jones Lang LaSalle. The panel was moderated by Tom Boyle, AIRE president, Newmark Grubb Knight Frank.
