INDUSTRIAL OUTLOOK: Manufacturing, E-Commerce, Supply Chains and the Future of Industrial CRE

Transcription

1 INDUSTRIAL OUTLOOK: Manufacturing, E-Commerce, Supply Chains and the Future of Industrial CRE OUTLOOK: DAVID EGAN, Director of Research and Analysis, CBRE MATT CIAMPA, Economist, CBRE Econometric Advisors

2 RECESSION COMPARISON 1990S 2001 CURRENT Availability Rate Increase (Level) 460bps (10.9%) 520bps (11.9%) 470bps (14.5%) Peak to Trough Rent Decrease -7.6% -8.1% -17.7% Trough to Current Rent 7.0% 9.4% 7.4% Lowest Construction Level (rate) 18.3msf (.19%) 26.5msf (.23%) 3.6 msf (.03%) Source: CBRE EA Industrial Outlook, Q

3 AVAILABILITY RATE RECOVERING, BUT REMAINS ELEVATED Avail. Rate (%) Quarters Source: CBRE EA Industrial Outlook, Q

4 RENTAL RECOVERY HAS A WAYS TO GO Rents fell further and faster than seen in previous recessions 100=prerecession Peak Q Source: CBRE EA Industrial Outlook, Q

5 CONSTRUCTION RUNNING WELL BELOW AVERAGE Completions, MSF Year Average Completions Level Forecast Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Source: CBRE EA Industrial Outlook, Q

6 CONSTRUCTION REMAINS CONCENTRATED These 10 Markets account for 63% of construction in last 12 months Source: CBRE EA Industrial Outlook, Q

7 LARGE BUILDINGS NOW DRIVING NEW CONSTRUCTION NATIONALLY Share of Completions, % Small Share Large Share Source: CBRE EA Peer Select, Q

8 ABSORPTION RUNNING ABOVE AVERAGE Absorption, (msf) Absorption Pre recession Avg Absorption Level Source: CBRE EA Industrial Outlook, Q

9 WEAK CONSTRUCTION, STRONG ABSORPTION ALLOWING THE RENT GROWTH TO TAKE HOLD Rent Inflation (%) 8 Availability Rate(%) Forecast Rent Inflation Availablity Rate Source: CBRE EA Industrial Outlook, Q

10 NOT JUST WAREHOUSE DEMAND DRIVING ABSORPTION, PRODUCTION TOO 3.5% 3.0% 4yr Historical Annual Absorption Rate 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% -0.5% -1.0% Historical Annual Manufacturing Employment Growth Source: CBRE EA Industrial Outlook, BLS, Q

11 TOP MARKET S SHARE OF MANUFACTURING EMPLOYMENT GROWTH TOTAL MANUFACTURING Sum of Markets (Jobs x 1000) (245.7) Detroit 26% -23% 5% Houston 20% 12% 8% Seattle 10% 11% 8% Nashville 6% -2% 0% San Jose 5% -1% 8% Orange County 5% -2% 5% Cleveland 4% -4% 2% Fort Worth 4% 0% 2% Atlanta 4% -2% 5% Salt Lake City 4% 3% 2% Source: BLS, Q

12 MAJOR INDUSTRIAL PRODUCTION SECTORS EXPANDING Index 2007 = Total Index Consumer Goods Equipment Materials Energy Source: Federal Reserve, Q

13 SUMMARY Industrial is well into recovery but has more room to grow Real rent growth will lead to higher completions Structural changes (e-commerce and the modern supply chains) are bullish for the sector Manufacturing sector looks stronger than it has in decades

14 SPEAKER BIOS CHRIS LUDEMAN Global President Capital Markets CBRE SCOTT MARSHALL Executive Managing Director Americas Industrial Services CBRE JEFF PALMQUIST Senior Vice President Duke Realty With more than 30 years at CBRE, Mr. Ludeman drives the company s advisory business for investors, including responsibility for Equity Sales, Debt and Structured Finance and Real Estate Investment Banking. In 2013, the company was the intermediary for more than $170 billion in capital markets engagements. He serves as a member of the Global Operating Committee and the Americas Operations Management Board. Scott Marshall, as CBRE s Executive Managing Director of Industrial Services for the Americas, manages and leads all aspects of CBRE s Industrial business in the United States, Canada and Latin America. The company s Industrial business in these regions is comprised of more than 950 professionals with specialties including E-Commerce, Global Supply Chain, Port Logistics, Food Facilities, Strategic Accounts and Premier Properties. Mr. Palmquist has been with Duke Realty for almost 20 years and currently oversees the Northeast region of the U.S. In this role, he leads Duke Realty s initiatives to acquire warehouse space in one of the nation s top industrial corridors.

15 SPEAKER BIOS DAVID EGAN Director of Research and Analysis CBRE MATT CIAMPA Economist CBRE Econometric Advisors Mr. Egan currently serves as the Director of Research and Analysis for CBRE s Chicago region. David focuses primarily on expanding the Chicago Research team s insight generation and market intelligence to help guide real estate strategies, identify risks and validate decisionmaking, and serves as the CBRE spokesperson on the commercial real estate environment. David brings over 10 years of experience in real estate valuation and market analysis from time spent as Manager of Transaction Real Estate at Ernst & Young. At CBRE Econometric Advisors, Mr. Ciampa s primary responsibility is managing the Industrial Outlook for the U.S. and Canada. Matt also analyzes economic indicators and trends that affect the industrial real estate market.