state of the u.s. industrial market - · pdf fileu.s. poised for growth contributions to gdp...

State of the U.S. Industrial Market 2014 Review & Forecast

© Copyright 2015. CoStar Realty Information, Inc. No reproduction or distribution without permission. The following information includes projections and analyses that are based on various

assumptions by CoStar concerning future events and circumstances, as well as historical and current data maintained in CoStar’s database, obtained from public sources or provided by proprietary

sources. Actual results may vary materially from the projections presented. The information in this presentation speaks only as of the date(s) referenced and is provided ‘as is’. CoStar expressly

disclaims any guarantees, representations or warranties of any kind, including those of merchantability and fitness for a particular purpose. You should not construe any of the information herein as

investment, tax, accounting or legal advice.

Economy

U.S. Poised For Growth

Contributions To GDP Growth

08

08

08

08

09

09

09

09

Sources: Moody's Analytics; BEA; CoStar Portfolio Strategy As of 14Q4

(2.0%)

(1.5%)

(1.0%)

(0.5%)

0.0%

0.5%

1.0%

(15%)

(10%)

(5%)

0%

5%

10%

08 09 10 11 12 13 14 15 16

Consumption Business Investment Residential Investment

Change in Inventories Exports Imports

Government Total GDP Job Growth

Job Growth (Q/Q)Contribution to GDP Growth

Mostly Positive Signals

Industrial Indicators Collected & Published On A Monthly Basis

Goods Consumption (2009 $, SAAR) 4.7%ISM Purchasing Managers' Index (Diffusion Index, SA) 3.0%FRB Industrial Production Index (2007 = 100, SA) 5.2%Port Traffic at LA/Long Beach (Loaded TEUs, 3 Mos Avg, NSAAR) (0.1%)ATA Truck Tonnage Index (2000 = 100, SAAR) 4.4%Housing Starts (SAAR) (5.6%)

Sources: Moody's Analytics; CoStar Portfolio Strategy As of November 2014

Change From One Year AgoIndicator

(8%)

(6%)

(4%)

(2%)

0%

2%

4%

6%

8%

$3.0 T

$3.1 T

$3.2 T

$3.3 T

$3.4 T

$3.5 T

$3.6 T

$3.7 T

$3.8 T

$3.9 T

05 06 07 08 09 10 11 12 13 14

Goods Consumption Change

Y/Y2009 $, SAAR

(40%)

(30%)

(20%)

(10%)

0%

10%

20%

30%

40%

0 M

2 M

4 M

6 M

8 M

10 M

12 M

05 06 07 08 09 10 11 12 13 14TEUs (Inbound) TEUs (Outbound)Change (Inbound) Change (Outbound)

Loaded TEUs, 3 Mos Avg, NSAAR Y/Y

(20%)

(15%)

(10%)

(5%)

0%

5%

10%

15%

20%

100

105

110

115

120

125

130

135

140

05 06 07 08 09 10 11 12 13 14

Truck Tonnage Index Change

2000 = 100, SAAR Y/Y

(60%)(50%)(40%)(30%)(20%)(10%)0%10%20%30%40%50%60%

0.0 M

0.5 M

1.0 M

1.5 M

2.0 M

2.5 M

05 06 07 08 09 10 11 12 13 14

Housing Starts Change

Y/YSAAR

(40%)

(20%)

0%

20%

40%

60%

80%

30

35

40

45

50

55

60

65

05 06 07 08 09 10 11 12 13 14Purchasing Managers IndexChange

Y/YDiffusion Index, SA Y/YDiffusion Index, SA

(20%)

(15%)

(10%)

(5%)

0%

5%

10%

80

85

90

95

100

105

110

05 06 07 08 09 10 11 12 13 14

IMO Industrial ProductionChange

Y/Y2007 = 100, SA

r120_us

1

3/31/2001

6/30/2001

9/30/2001

########

3/31/2002

6/30/2002

9/30/2002

########

3/31/2003

6/30/2003

9/30/2003

########

3/31/2004

6/30/2004

9/30/2004

########

3/31/2005

6/30/2005

9/30/2005

########

3/31/2006

6/30/2006

9/30/2006

########

3/31/2007

6/30/2007

9/30/2007

########

Sources: Bloombers, CoStar Portfolio Strategy As of 14Q4

0%

1%

2%

3%

4%

5%

13 14 15 16 17 18 19

14Q4 14Q3 14Q2 14Q1 13Q4

U.S. Treasury Forward Yield Curve

What Goes Down Sometimes Stays Down

Shifts In The Forward Curve

Quarter In Review

Not All Boxes Are Created Equally

Industrial Subtypes

Warehouse Distribution

Light ManufacturingLight Industrial

Loading Dock Clear Office

RBA Ratio (SF/Dock) FAR Height Finish Shape

Warehouse 25K+ SF <=15K SF <= 0.5 22'+ <20% Box

Distribution 200K+ SF <=10K SF <= 0.4 28'+ <5% Box

Light Industrial <=120K SF <=15K if 25K+ SF box Any 16'+ <50% Box if <25K SF

Light Manufacturing 100K-300K SF 15K+ SF Any 12'-22' <50% Any

Source: CoStar Portfolio Strategy As of 14Q2

Logistics

Light Industrial

Major Industrial

SubtypeComponent Subtypes

Source: CoStar Portfolio Strategy As of 2015


Industrial Data By Slice


4.5%4.8%

4.6%

2.4%

4.8% 4.6%

1.3%

4.6%4.9%

4.5%

1.5%

0%

1%

2%

3%

4%

5%

6%

7%

Industr

ial

Lo

gis

tics

Lig

ht

Ind

ustr

ial/M

fg

Dis

trib

ution

Ware

hou

se

Lig

ht

Ind

ustr

ial

Old

Dis

trib

ution

Old

or

Sm

all W

are

hou

se

Big

Lig

ht

Ind

ustr

ial

Sm

all L

ight

Indu

str

ial

Lig

ht

Ma

nufa

ctu

rin

g

Change in Rent Y/Y

Total

High

Function

2014 Change in Rent

Low

Function


Industrial Data By Slice


6.6%

8.7%

4.8%

10.8%

8.3%

5.5%

7.8%8.8%

5.6%

4.2% 4.1%

0

2

4

6

8

10

12

0%

2%

4%

6%

8%

10%

12%

14%

16%

Industr

ial

Lo

gis

tics

Lig

ht

Ind

ustr

ial/M

fg

Dis

trib

ution

Ware

hou

se

Lig

ht

Ind

ustr

ial

Old

Dis

trib

ution

Old

or

Sm

all W

are

hou

se

Big

Lig

ht

Ind

ustr

ial

Sm

all L

ight

Indu

str

ial

Lig

ht

Ma

nufa

ctu

rin

g

Vacancy Total SF

2014 Vacancy SF (Billions)

Total High

Function Low

Function


Industial Data By Slice


167

116

51 55

35

8 3

24 16

23

4

0

20

40

60

80

100

120

140

160

180

Industr

ial

Lo

gis

tics

Lig

ht

Ind

ustr

ial/M

fg

Dis

trib

ution

Ware

hou

se

Lig

ht

Ind

ustr

ial

Old

Dis

trib

ution

Old

or

Sm

all W

are

hou

se

Big

Lig

ht

Ind

ustr

ial

Sm

all L

ight

Indu

str

ial

Lig

ht

Ma

nufa

ctu

rin

g

Net Absorption

2014 Net Absorption (Millions SF)

Total High

FunctionLow

Function14Q4 = 51 MM


Industial Data By Slice


108

100

9

76

5 4

18

3 2 0

20

40

60

80

100

120

Industr

ial

Lo

gis

tics

Lig

ht

Ind

ustr

ial/M

fg

Dis

trib

ution

Ware

hou

se

Lig

ht

Ind

ustr

ial

Old

Dis

trib

ution

Old

or

Sm

all W

are

hou

se

Big

Lig

ht

Ind

ustr

ial

Sm

all L

ight

Indu

str

ial

Lig

ht

Ma

nufa

ctu

rin

g

Delivered RBA

2014 Delivered RBA (Millions SF)

Total

High

Function

Low

Function

14Q4 = 31 MM

2014 Rent Growth

Winners & Losers

1413121110

987654321

1413121110

987654321


7.3%

7.7%

8.4%

8.5%

9.6%

9.6%

9.6%

9.8%

11.0%

11.8%

12.5%

14.0%

15.0%

15.1%

17.2%

0% 10% 20%

Los Angeles LIM

Nashville LOG

San Jose LIM

Orange Cnty LOG

Reno LIM

San Antonio LOG

East Bay LOG

Northern NJ LOG

New York LIM

Long Island LOG

Denver LIM

San Fran LIM

San Fran LOG

Denver LOG

New York LOG

Strongest Rent Growth

0.1%

0.1%

(0.1%)

(0.2%)

(0.4%)

(0.6%)

(0.8%)

(0.9%)

(0.9%)

(1.1%)

(1.4%)

(2.1%)

(2.1%)

(3.1%)

(4.6%)

(10%) (5%) 0% 5%

Memphis LOG

Las Vegas LIM

Kansas City LIM

Jacksonville LIM

Washington D.C. LIM

Tampa LOG

Edison LIM

Milwaukee LOG

Cleveland LIM

Saint Louis LOG

Washington D.C. LOG

Kansas City LOG

Indianapolis LOG

Raleigh LIM

Philadelphia LOG

Weakest Rent Growth

2014 Occupancy Change

Winners & Losers

1413121110

987654321

1413121110

987654321


1.9%

2.0%

2.0%

2.0%

2.1%

2.3%

2.4%

2.6%

2.7%

2.7%

2.8%

2.9%

3.2%

5.0%

6.3%

0% 2% 4% 6% 8%

Raleigh LOG

Fort Lauderdale LOG

East Bay LOG

Los Angeles LOG

Las Vegas LOG

Saint Louis LOG

San Jose LOG

Reno LIM

Jacksonville LOG

San Diego LOG

Atlanta LOG

Lehigh Valley LOG

Sacramento LOG

San Fran LOG

Harrisburg LOG

Strongest Occupancy Chg

(0.4%)

(0.4%)

(0.6%)

(0.6%)

(0.6%)

(0.7%)

(0.8%)

(1.0%)

(1.1%)

(1.1%)

(1.1%)

(1.3%)

(2.4%)

(2.8%)

(4.4%)

(5%) 0%

Dallas LOG

Cleveland LOG

Memphis LOG

Edison LOG

Indianapolis LIM

Philadelphia LOG

Inland Empire LOG

Orange Cnty LOG

OK City LOG

Long Island LOG

Kansas City LOG

San Antonio LOG

Indianapolis LOG

Salt Lake City LOG

Austin LOG

Weakest Occupancy Chg

2014 Net Absorption

Winners & Losers

151413121110

987654321

949596979899

100101102103104105


3.1

3.4

3.6

3.8

3.8

3.9

4.3

4.3

4.7

5.4

6.8

6.9

11.8

12.1

16.0

0 4 8 12 16 20

Phoenix LOG

Detroit LIM

Harrisburg LOG

Houston LIM

Baltimore LOG

Lehigh Valley LOG

Los Angeles LIM

Chicago LIM

Columbus OH LOG

Houston LOG

Los Angeles LOG

Chicago LOG

Dallas - Fort Worth LOG

Atlanta LOG

Inland Empire LOG

Strongest Absorption (MSF)

0.2

0.2

0.1

0.1

0.0

(0.0)

(0.0)

(0.1)

(0.1)

(0.2)

(0.2)

(0.5)

(0.6)

(0.8)

(1.0)

(1) 0 1

Salt Lake City LIM

Lehigh Valley LIM

Oklahoma City LOG

Harrisburg LIM

Baltimore LIM

Boston LIM

San Antonio LOG

San Francisco LIM

Long Island LOG

Cleveland LOG

New York LIM

Indianapolis LIM

Austin LOG

Philadelphia LOG

Salt Lake City LOG

Weakest Absorption (MSF)

2014 Deliveries

Winners & Losers

2524232221201918171615141312


2.5

2.5

2.6

2.6

2.9

3.1

3.2

3.5

4.3

4.5

5.3

5.8

7.6

14.2

19.6

0 5 10 15 20 25

Charlotte LOG

Houston LIM

Lehigh Valley LOG

Memphis LOG

Baltimore LOG

Atlanta LOG

Edison LOG

Phoenix LOG

Kansas City LOG

Columbus OH LOG

Indianapolis LOG

Houston LOG

Chicago LOG

Dallas LOG

Inland Empire LOG

Strongest Delivered RBA (Millions SF)

Fundamentals

Light Industrial Has More Runway

Logistics & Light Industrial Market Cycle

Baltimore

New York

Edison

AtlantaSF

MemphisDallas

Inland Empire Indianapolis

OCC

RENT

OCC

RENT

OCC

RENT

OCC

RENT

Norfolk

Lehigh Valley

Kansas CitySan AntonioMinneapolis

Inland EmpireChicagoDallasDenver

Houston

Indianapolis

Light Industrial Logistics


43

53

10

1

0 1

0 0


0%

2%

4%

6%

8%

10%

12%

14%

(35)

(25)

(15)

(5)

5

15

25

35

45

55

65

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

Vacancy (%)

Avg: 10.9%

13.4%Down 4.7%

11.9%

8.7%

8.9%

Change in Demand, Millions SF (Q/Q)Change in Supply, Millions SF (Q/Q) Vacancy Avg. 2000-2013

Logistics

$4

$5

$6

$7

$8

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

Rent

Logistics Recovery Nearly Complete

Supply, Demand, Vacancy, & Rent In Logistics National Index


0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

(35)

(25)

(15)

(5)

5

15

25

35

45

55

65

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

Vacancy (%)

Avg: 6.1%

7.3% Down 2.5%6.8%

4.9%

4.4%

Change in Demand, Millions SF (Q/Q)Change in Supply, Millions SF (Q/Q) Vacancy Avg. 2000-2013

Light Industrial

$4

$5

$6

$7

$8

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

Rent

Light Industrial: Just As Large, But Half As Volatile

Supply, Demand, Vacancy, & Rent In Logistics National Index

Logistics Construction Is Ramping Up

RBA Under Construction & Vacancies Nationwide

44 MM SF

44

Quarter9/30/2007

12/31/20073/31/20086/30/20089/30/2008

12/31/20083/31/20096/30/20099/30/2009

12/31/20093/31/20106/30/20109/30/2010

12/31/20103/31/20116/30/20119/30/2011

12/31/20113/31/20126/30/20129/30/2012

12/31/20123/31/20136/30/20139/30/2013

12/31/20133/31/20146/30/2014


79 83

68 69 67

4840 36

2822 23 28 26 28 27 31 29 26 32

40 4335

53 56 5160 62 59 56 59

10086

8369

55

32

20

9

3

1 11 1 2 2

2 3 10

13

1317

19

2122 32

3743 49

63

77

8%

9%

10%

11%

12%

13%

14%

0

20

40

60

80

100

120

140

160

180

20007Q

3

07Q

4

08Q

1

08Q

2

08Q

3

08Q

4

09Q

1

09Q

2

09Q

3

09Q

4

10Q

1

10Q

2

10Q

3

10Q

4

11Q

1

11Q

2

11Q

3

11Q

4

12Q

1

12Q

2

12Q

3

12Q

4

13Q

1

13Q

2

13Q

3

13Q

4

14Q

1

14Q

2

14Q

3

14Q

4

UC Committed UC Available Vacancy

RBA Under Construction (Millions SF) Vacancy (%)

8.9%

44 MM SF

12/31/1999

3/31/2000

6/30/2000

9/30/2000

12/31/2000

3/31/2001

6/30/2001

9/30/2001

12/31/2001

3/31/2002

6/30/2002

9/30/2002

12/31/2002

3/31/2003

6/30/2003

9/30/2003

12/31/2003

3/31/2004

6/30/2004

9/30/2004

12/31/2004

3/31/2005

6/30/2005

9/30/2005


0

20

40

60

80

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Light Industrial & Logistics Stock Growth (MSF)

Light Industrial & Logistics

Under Construction

Developers Focused On Logistics

Historical Deliveries & Current Under Construction

Rents Are Starting To Justify Construction

Logistics/Light Industrial Rent & Supply Trends


$3.50

$4.00

$4.50

$5.00

$5.50

$6.00

0

50

100

150

200

94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Annual Net Completions* Net Completions YTDRent Long-Term Rent Trend: 1%

Long-Term Trend vs. Current Rent: -0.9%

Logistics Net Completions (Millions SF) Rent ($/SF)

$4.00

$5.00

$6.00

$7.00

$8.00

01020304050607080

94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Annual Net Completions* Net Completions YTDRent Long-Term Rent Trend: 1.9%

Long-Term Trend vs. Current Rent: -2.5%

Light Industrial Net Completions (Millions SF) Rent ($/SF)

Not All Markets Are Impacted Equally

14Q4 Logistics UC Committed Vs. UC Available

Inland Empire 1.9 11.5 3.7%

Lehigh Valley 2.4 1.6 3.1%

Houston 1.7 5.5 3.1%

Harrisburg 1.4 1.4 2.7%

Seattle 1.0 2.6 2.4%

Dallas - Fort Worth 5.9 8.5 2.2%

Atlanta 5.6 6.9 2.0%

Portland, OR 0.1 1.3 1.9%

Phoenix 1.2 1.9 1.9%

Indianapolis 0.8 2.2 1.8%

Columbus OH 0.8 2.0 1.3%

Chicago 6.3 4.0 1.0%

Saint Louis 0.1 0.7 0.8%

Miami 0.3 0.5 0.7%

Memphis 1.3 1.1 0.7%

Philadelphia 1.8 1.0 0.6%

Los Angeles 0.5 1.5 0.6%

Edison 0.0 0.8 0.5%

Northern New Jersey 0.0 0.1 0.2%

Reno 1.2 0.0 0.0%


Millions SF UC AvailableUC Committed UC Available As % Of Inventory

123456789

10111213141516171819202122232425


(2)

0

2

4

6

8

10

12

14

16

18In

land E

mpire

Ch

icago

Da

llas -

Fort

Wort

h

Atlan

ta

Los A

ngele

s

Ho

usto

n

India

na

polis

Mem

phis

Sea

ttle

Phila

delp

hia

Pho

enix

Cin

cin

nati

Na

shvill

e

Co

lum

bus O

H

Sain

t Louis

Baltim

ore

Ch

arlotte

Kan

sas C

ity

Min

nea

polis

Mia

mi

East

Bay

Ne

w Y

ork

De

troit

Average Annual 2003-2007 2013 2014

Demand (Million SF)

Accelerating Logistics Markets

Historic Demand Vs Recent Demand

123456789

10111213141516171819202122232425


0

2

4

6

8

10

12

14

16

18

20In

land E

mpire

Ch

icago

Atlan

ta

Da

llas -

Fort

Wort

h

India

na

polis

Ho

usto

n

Mem

phis

Los A

ngele

s

Sea

ttle

Co

lum

bus O

H

Pho

enix

Phila

delp

hia

Sain

t Louis

Cin

cin

nati

Na

shvill

e

Baltim

ore

Ch

arlotte

De

troit

Kan

sas C

ity

Mia

mi

Min

nea

polis

Ne

w Y

ork

East

Bay

Average Annual 2003-2007 2013 2014

Supply (Million SF)

Accelerating Logistics Markets

Historic Supply Vs Recent Supply

Mind The Blocks

Minneapolis Block Analysis, 50K-125K

PeriodAnnual

Min Block50,000

50K-125K# 50K-125K Blocks

20-20

Lookup200710275692007102756920145023046200753180942007571642320075716423


0.5

0.80.8

3.3

0.50.7

0.5 0.5 0.5

0

1

2

3

4

5

32

28

24

20

16

12

8

4

0

4

8

12

16

20

24

28

32

2006 2007 2008 2009 2010 2011 2012 2013 2014

# 50K-125K Blocks Absorption Ratio

# Blocks Under Construction & Available# Vacant Existing Blocks (Buildings <10 Years Old)# Blocks Taken

#Abs. Ratio

Mind The Blocks

Miami Block Analysis, 125K-500K

PeriodAnnual

Min Block124,000

125K-500K# 125K-500K Blocks

20-20

Lookup200736963220073696322005450129200645012920064501292006450129


0.5

1.0

1.8

1.31.0

0.2

1.3

2.32.0

0

1

2

3

4

5

20

16

12

8

4

0

4

8

12

16

20

2006 2007 2008 2009 2010 2011 2012 2013 2014

# 125K-500K Blocks Absorption Ratio


#Abs. Ratio

Mind The Blocks

Memphis Block Analysis, 500K+

PeriodAnnual

Min Block500,000

500K+# 500K+ Blocks

20-20

Lookup200584077420059678862005967886200599568020059956802005995680


1.8

4.5

2.3

1.3

0.5

1.0

0.6

1.0

0

1

2

3

4

5

20

16

12

8

4

0

4

8

12

16

20

2006 2007 2008 2009 2010 2011 2012 2013 2014

# 500K+ Blocks Absorption Ratio


#Abs. Ratio

Danger Zone

Oil Prices

U.S. Energy Consumption and Prices

12/31/1986

3/31/1987

6/30/1987

9/30/1987

12/31/1987

3/31/1988

6/30/1988

9/30/1988

12/31/1988

3/31/1989

6/30/1989

9/30/1989

12/31/1989

3/31/1990

6/30/1990

9/30/1990

12/31/1990

3/31/1991

6/30/1991

9/30/1991

12/31/1991

3/31/1992

6/30/1992

9/30/1992

12/31/1992

Sources: EIA; Moody's Anlalytics; CoStar Portfolio Strategy As of 15Q1

*2014-2015 Demand Based off EIA Forecast

15

16

17

18

19

20

21

22

$0

$20

$40

$60

$80

$100

$120

$140

87 89 91 93 95 97 99 01 03 05 07 09 11 13 15

Oil price Oil Demand

Oil Consumption (MM Barrels/Day)*Price

Massive Spending & Employment Cuts In Progress

Full Cycle Break-Even Costs In Selected Oil Producing Regions

Note: Break-even costs based on price of WTI benchmarked for given project to yield a 9% after-tax return on full-cycle costs.

Sources: EIA; Scotiabank Equity Research; Scotiabank Economics; CoStar Portfolio Strategy As of 15Q1

$0

$20

$40

$60

$80

$100

$120

Eagle Ford, TX Niobrara, CO Bakken, ND Permian, TX Canada Oil Sands - Existing Proj. Canada Oil Sands - New/Upgraded Proj.

Break-Even Production Cost – WTI Oil Price/Barrel Required

WTI Spot Price January 2015 Avg = $45

Wtd Avg. U.S. Break Even Cost = $68

Where Does Oil Strike?

Top 12 Metros With Highest Energy Location Quotient

Rank123456789

101112


*Share of Natural Resources & Mining Employment Relative to U.S. Average

0

1

2

3

4

5

6

7

Ho

usto

n

Okla

hom

a C

ity

Ne

w O

rlean

s

Pitts

burg

h

De

nver

Da

llas

San

An

tonio

Salt L

ake C

ity

Austin

Pho

enix

Sain

t Louis

Los A

ngele

s

Energy Employment Location Quotient*

Moody’s Analytics GDP and Consumption Scenarios

Low Oil Prices A Potential Upside Nationally

########30-Jun-90########################30-Jun-91########################30-Jun-92########################30-Jun-93########################30-Jun-94########################30-Jun-95########################

Sources: EIA; BLS; Moody's Analytics As of 14Q4

(6%)

(4%)

(2%)

0%

2%

4%

6%

90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20Low Oil Price Basecase

0

20

40

60

80

100

120

140

90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20Low Oil Price Basecase

WTI ($ per Barrel)

GDP (Y/Y)

Capital Markets

All Property Sales Up 12.7%

National Index Sales By Property Type

Multi-FamilyOfficeRetailIndustrialHospitalityAll


6%

11%

22%

8%

2%

0%

5%

10%

15%

20%

25%

$0

$20

$40

$60

$80

$100

$120

$140

Multi-Family Office Retail Industrial Hospitality

2014 U.S. Sales Volume ($B) 2014 vs 2013

New Supply Needed To Lift Transaction Volume

New Construction Inventory And Ratio Of Sales For New Buildings Vs All

Quarter369813707237164372563734637437375293762137711378023789437986380773816838260383523844238533386253871738807388983899039082391723926339355


Note: Four Quarter Rolling Averages

100

300

500

700

900

02 03 04 05 06 07 08 09 10 11 12 13 14

Logistics RBA <5 Years Old (Millions)

10%

15%

20%

25%

30%

35%

02 03 04 05 06 07 08 09 10 11 12 13 14

Percent Of SF Traded <5 Years Old

Institutional Investment Volume Never Stronger

Institutional Industrial Pricing & Sales Volume*


*Four-quarter rolling average.

5%

6%

7%

8%

9%

10%

$30$35$40$45$50$55$60$65$70$75

01 02 03 04 05 06 07 08 09 10 11 12 13 14

$/SF Cap Rate Cap Rate - Institutional

$/SF Cap Rate

0

20

40

60

80

100

120

140

$0

$1

$2

$3

$4

$5

$6

$7

01 02 03 04 05 06 07 08 09 10 11 12 13 14

SF Traded Sales Volume ($)

Sales Volume ($B) Sales Volume (Millions SF)

Investor Interest In Secondary Markets On The Rise

Sales Volume & Pricing For Core Vs. Secondary Markets

ls8889909090909191919192


A Markets: Atlanta, Chicago, Dallas, Edison, Houston, Inland Empire, Los Angeles, Miami, Seattle | B Markets: Austin,

Baltimore, Cincinnati, Columbus, Denver, Harrisburg, Indianapolis, Kansas City, Lehigh Valley, Memphis, Nashville, Orlando,

Phoenix, Portland, Raleigh, St. Louis, Tampa

$0

$10

$20

$30

$40

$50

$60

$70

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

"A" Markets Sales Volume "B" Markets Sales Volume

"A" Markets Pricing "B" Markets Pricing

Sales Volume (Billions) $/SF (Four Quarter Rolling Average)

YY76848585868888898989909090909191919192929292939393939494949495


$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Spread LIM Logistics

Price/SF, Two-Quarter Rolling Average

Avg spread 11-12:$12.00 or 26%

Avg Spread 2002-07: $20.78 or 45%

Avg spread 2014:$20.27 or 38%

Light Industrial Is Pulling Away From Logistics

Pricing Spread For Top 210 Markets

Which Markets Are Above Peak Pricing

Comparison Of Logistics Pricing Vs. Prior Peak

123456789

1011121314151617181920


$0

$20

$40

$60

$80

$100

$120

$140

Austin

Ric

hm

ond

Salt L

ake C

ity

Ho

usto

n

No

rthern

NJ

India

na

polis

Lehig

h V

alle

y

Baltim

ore

Ha

rris

bu

rg

Los A

ngele

s

Washin

gto

n D

C

San

An

tonio

Okla

hom

a C

ity

Ch

arlotte

Co

lum

bus O

H

Mia

mi

Phila

delp

hia

Milw

aukee

Ch

icago

Cin

cin

nati

Past 4 Quarters Average 2007 Average

Price/SF

Which Markets Are Below Peak Pricing

Comparison Of Logistics Pricing Vs. Prior Peak

Spread Rank123456789

1011121314151617181920


$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

San

Jose

Re

no

San

Fra

ncis

co

San

Die

go

Long I

sla

nd

Palm

Be

ach C

nty

Las V

egas

De

troit

Sacra

mento

Orlando

Sea

ttle

Kan

sas C

ity

No

rfolk

De

nver

Cle

vela

nd

Bosto

n

Jacksonvill

e

Ora

ng

e C

ounty

Ra

leig

h

Ne

w Y

ork

Past 4 Quarters Average 2007 Average

Price/SF

Selected Top Industrial Deals

2014 Q4

Deutsche Asset Wealth Mgmt / Greenfield Multi-state D.A.W.M. , as manager to its RREEF American Fund, sold a 7.8 million square foot portfolio or B & C Class assets to Greenfield Partners $390.0 million at an approximate 7.0% cap rate.

KBS Realty / Chambers Street Portfolio Northeast PA KBS Realty Advisors sold the 4-building, 1.64 million square foot industrial portfolio to Chambers Street Properties for $105.7 million at a 7.5% cap rate.

Cobalt Industrial REIT/Colony Portfolio 26 States Cobalt Industrial REIT II sold its portfolio of 256 assets to Colony Financial for 1.6 billion and comprising 30.1 million square feet of Class B & C industrial space. The buyer places it as a 7.0% pro forma cap rate.

255 Logistics Center Sauget, IL Covington Group sold a 502,500 square foot Class-A warehouse to Chambers Street Properties for $19.9 million and at a cap rate of 8.10%.

Dallas Distribution Portfolio Dallas Market, TX Oakmont Industrial Group sold three industrial buildings totaling 1.28 million square feet to Industrial Property Trust for $74.6 million.

14600 Innovation Drive Riverside, CA Sun Life Assurance sold a 600,000 square foot Class A warehouse to Scuderia Development, LLC (China) in a $43.8 million owner/user sale.

These Costar Portfolio Strategy Materials Contain Financial And Other Information From A Variety of public and proprietary

sources. CoStar Group, Inc. and its affiliates (collectively, “CoStar”) have assumed and relied upon, without independent

verification, the accuracy and completeness of such third party information in preparing these materials.

The modeling, calculations, forecasts, projections, evaluations, analyses, simulations, or other forward-looking information

prepared by CoStar and presented herein (the “Materials”) are based on various assumptions concerning future events

and circumstances, which are speculative, uncertain and subject to change without notice. You should not rely upon the

Materials as predictions of future results or events, as actual results and events may differ materially. All Materials speak

only as of the date referenced with respect to such data and may have materially changed since such date. CoStar has no

obligation to update any of the Materials included in this document. You should not construe any of the data provided

herein as investment, tax, accounting or legal advice.

CoStar does not represent, warrant or guaranty the accuracy or completeness of the information provided herein and shall

not be held responsible for any errors in such information. Any user of the information provided herein accepts the

information “AS IS” without any warranties whatsoever. To the maximum extent permitted by law, CoStar disclaims any

and all liability in the event any information provided herein proves to be inaccurate, incomplete or unreliable.

© 2015 CoStar Realty Information, Inc. No reproduction or distribution without permission.

Rene Circ, Director Of Research – Industrial

[email protected]

Shaw Lupton, Senior Real Estate Economist

[email protected]

state of the u.s. industrial market - · pdf fileu.s. poised for growth contributions to gdp...

Documents