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TRANSCRIPT
PRESENTATION
March 30, 2017
BRADLEY MIGDALSenior Managing Director
Manufacturing’s Role:
Industrial Market
Industrial Type Square Feet
Multi-tenant Distribution Warehouse 5,383,996,116
Manufacturing 3,142,084,067
Bulk Distribution Warehouse 2,218,998,543
Owner/User Warehouse 1,615,198,834
R&D/Flex 1,345,999,029
Other 269,199,808
Total U.S. Industrial Market 13,975,476,397
Multi-tenant Distribution Warehouse
39%
R&D/Flex10%
Owner/User Warehouse
12%
Bulk Distribution Warehouse
16%
Manufacturing22%
2016 Industrial Performance
Strongest 3-year run of growth on record(Net absorption, msf)
226235
265
244 243
205
272 270283
0
50
100
150
200
250
300
350
Demand: 726.8 msfSupply: 630.7 msfSpec: 473.8 msf75% spec deliveries
Demand: 692.6 msfSupply: 574.7 msfSpec: 438.3 msf76% spec deliveries
Demand: 825.5 msfSupply: 550.3 msfSpec: 339.0 msf62% spec deliveries
2016 Industrial Performance
Top markets by square feet of occupancy growth
0.0
5.0
10.0
15.0
20.0
25.0
MS
F
2016 Industrial Performance
The Pistons of the U.S. industrial engine
Rank MarketsRecessionary
2008-2010
Expansion
2011-2016
1 Inland Empire 7,607,093 94,759,223
2 Chicago -22,309,349 83,347,357
3 Dallas/Ft. Worth 2,962,888 70,756,426
4 Atlanta 7,262,608 60,319,162
5 PA I-81/I-78 Corridor 10,153,291 54,572,822
6 Central New Jersey -5,118,967 39,463,722
7 Phoenix -244,262 39,093,911
8 Houston 176,076 36,067,254
9 Los Angeles -34,371,295 31,844,287
10 Indianapolis 13,988,987 27,269,539
11 Philadelphia -2,090,745 29,669,222
12 Cincinnati 1,110,435 24,313,248
13 Nashville -4,917,825 24,307,103
14 Memphis 1,361,364 22,702,878
15 Detroit -3,851,095 19,674,105
16 Denver 3,165,751 19,259,395
17 Kansas City -1,415,858 19,000,351
18 East Bay/Oakland -6,560,335 16,939,151
19 Louisville 5,732,067 15,892,966
20 Northern New Jersey -16,758,281 13,925,722
28 straight quarters
of occupancy gains
Coming off the
strongest 3-year
gains on record
Vacancy is at its
lowest level in 30
years
All segments of
commercial real
estate are growing
Auto-related
manufacturing and
distribution is part
of the story
2016 Industrial Performance
Tight market: vacancy rates remain lower than last cycle
0%
2%
4%
6%
8%
10%
12%
14% 4Q 2016 Vacancy Prior Cycle Lows (2002-2007)
Manufacturing Snapshot
Growing states
-20
-15
-10
-5
0
5
10
15
20
25
0
5
10
15
20
25
30
35
Gro
wth
in
Ma
nu
fac
turi
ng
GS
P (
20
10
-20
16
)
% o
f S
tate
GD
P
Vacancy Rates
Atlanta, GA
10.7%2011 Q4
8.6%2016 Q3
Chicago, IL
9.8%2011 Q4
6.1%2016 Q3
Dallas, TX
12.1%2011 Q4
6.6%2016 Q3
Los Angeles,CA
4.9%2011 Q4
1.3%2016 Q3
InlandEmpire, CA
8.0%2011 Q4
4.7%2016 Q3
OrangeCounty, CA
9.6%2011 Q4
4.3%2016 Q3
New Jersey,Central
9.5%2011 Q4
5.9%2016 Q3
New Jersey,Northern
6.3%2011 Q4
2.2%2016 Q3
Asking Rents
Atlanta, GA
$3.742011 Q4
$4.17 2016 Q3
Chicago, IL
$4.012011 Q4
$4.79 2016 Q3
Dallas, TX
$4.072011 Q4
$4.89 2016 Q3
Los Angeles, CA
$6.222011 Q4
$8.79 2016 Q3
InlandEmpire, CA
$4.332011 Q4
$6.58 2016 Q3
OrangeCounty, CA
$5.352011 Q4
$7.18 2016 Q3
New Jersey,Central
$5.982011 Q4
$7.71 2016 Q3
New Jersey,Northern
$7.632011 Q4
$10.91 2016 Q3
Everything is Different │ Different is Great for Industrial
Eight New Challenges Driving Prices and Absorption
Industrial Is the
New Black.
When Does this “Cycle” End?
Forecasting is Flawed.
Different Means New Building Types
Two Factors Driving the Business into New Buildings
The “Sea of Change” in Cities...Here to Stay?
Household Migration….Enabled by Technology & Prosperity
• MW, parts of NE, “Old south” populations declining
• What happens in the next 5 years?
• What does a recession do?
2015: Total Urban Population Growth, 1.06%, Total Suburban Population Growth, 1.00%
What does this mean for my community?
Time is Money!
What Can I do as an Economic Developer?
What are my tools?
What is my ROI advantage?
How do I compare to my neighbors?
What is in the Future?
Changing Industrial Landscape
What users are looking for
• Large auto parking areas and more trailer storage
• Increasing clear heights
» 32’ clear under 300K
» 36’ clear over 300K-400K
» 40’ more commonplace (eCommerce)
• Proximity to parcel hubs
• Higher amperage (e.g., 8000) with access to more
• AC for mezzanine due to higher headcounts
• Increase air exchanges
• Greater site security (e.g., fencing, gates, etc.)
• Better traffic circulation
» Two ingress/egress options
» More onsite queuing
» Separated car and trailer traffic (ring roads)
» Access to a controlled (traffic light intersection)
right off site
• Specific and wider column spacing: 50x60 and 56x56
MOST REQUESTED FEATURES
• Ultra-smooth floors for wire guided systems
• LED lighting (instead of T-5/T-8) and motion sensors
• ESFR
• Deeper truck courts (135’ to 200’)
• Full dock packages (lights, levelers and locks)
» 35-40K lb. locks
» 7x8 levelers – preferably hydraulic
• Sustainable designs but not necessarily LEED
• Avoid internal roof drains
• Flow-through (even if one side isn’t used) for greater
flexibility
• Large speed bays (70’-80’)
• Infill locations are looking for:
» 30’ clear heights | flow through | 100-200K
• Full concrete courts
• Thicker floors to accommodate MHE infrastructure
• Knock out panels on endcaps
My community is not big enough for that…
What do I look for?
What is my communities value proposition?
What industry clusters do we have?
Do we have rail, a port, interstates, an airport?
Do we have a building? Do we have shovel ready sites?
KEEPCALM
AND
GOGET ‘EM
Now I know what the future holdsWhere I stack upTime to go get ‘em!
How Do I Execute My Plan?
• Understand my existing companies supply chain!
• Know, ask them what they need to grow
• Understand my targeted industries – update them
• Understand my labor market – Tech Schools – College & Universities – Existing Workforce – Plant Closures
• Get people and companies to see my community
o Tell my story. Be proud. Brag
o Talk about the good and the bad
o Develop relationships with decision makers.
o Make sure the right people are telling the story!
Q& A
Thank You!
Brad Migdal
Senior Managing Director
Business Incentives Practice
312 775 2679