Transcript Presentation Template

Industrial Real
Estate Trends
Presented to:
2010 CCIM Commercial Real Estate
Outlook Conference
Presented by:
CB RICHARD ELLIS, INC.
Michael Silver, SIOR
First Vice President
Industrial Brokerage Services
U.S. Distressed Properties
4th Quarter 2009
(In Billions of Dollars)
O ffice
$17.9
19%
Hotel
$11.3
12%
Industrial
$2.4
3%
Multi-Family
$18.7
20%
Development
$13.1
14%
Retail
$30.6
32%
Miami-Dade Industrial Market Statistics
4th Quarter 2009
Submarke
t
Building
SF
Total
Total
Vacancy
Availability %
%
Avg Asking
Dir Lse
Rate (IG)
YTD
Net
Absorption
Under
Constructio
n
Constructio
n
Completion
s
Airport/Doral
55,972,555
11.9
9.4
$8.77
-1,483,911
75,000
510,695
Central Dade
39,428,361
9.5
7.4
$5.75
-788,887
0
0
Hialeah
16,992,244
15.8
15.5
$5.55
-858,844
0
60,000
Kendall/Tamiami
14,050,182
5.2
4.9
$10.16
-149,154
0
219,450
Medley
40,839,958
13.4
11.7
$7.56
-509,495
0
768,879
Miami Lakes
8,642,524
18.3
13.3
$6.64
-584453
0
89,743
North Central Dade
35,785,587
13.2
11.0
$6.12
-627,473
0
312,815
North East Dade
3,693,559
13.6
13.1
$6.11
-444,806
0
0
South Dade
5,498,047
8.5
5.6
$8.12
-143,976
0
26,769
221,269,059
12.0
10.0
$7.20
-5,590,999
75,000
1,988,351
Total
Miami-Dade Industrial Market Statistics
4th Quarter 2009
Vacancy
Asking Lease
Rate
Rate
Total Vacancy -vs- Average Asking Lease Rate
10.0 %
$7.20
$9
8%
$8
6%
$7
4%
2%
$6
0%
$5
2004
2005
2006
2007
2008
2009 YTD
Miami-Dade Industrial Market Statistics
4th Quarter 2009
Bulk
Flex
Direct Asking Lease Rate (IG)
$7.02
$11.57
$12
$10
$8
$6
$4
$2
$0
2005
2006
2007
2008
2009
Miami-Dade Industrial Market Statistics
Airport/Doral Asking Lease Rates vs. Effective Lease Rates
Miami-Dade Industrial Market
4 Quarter 2009
Statistics
th
Net Absorption
YTD
2009
5,000
(5, 590) K
4,000
3,000
2,000
1,000
0
-1,000
-2,000
-3,000
-4,000
-5,000
-6,000
2004
2009
2005
2006
2007
2008
2009 Market Trends – Tenant/Occupier
Tenant/Occupier Trends
 Tenants are driving cheaper deals.
 Tenants investigate market and then renew.
 Tenants are requesting increase in rent versus funding outof-pocket improvements.
 Tenants are looking to utilize less space and increase
efficiencies.
 Tenants are looking to reduce all occupancy costs, not just
rent.
 Decision making is getting through division and real estate
but then is not approved or stalled at corporate level.
 Portfolio optimization will be high on companies’ lists of
priorities.
2009 Market Trends – Tenant/Occupier
Tenant/Occupier Trends Cont’d.
 Outsourcing services are and will continue to be in
high demand.
 Reconfiguration of supply chain is driving new demand
for space.
 More Tenants choosing to keep requirements
confidential due to internal impact on employment.
 Tenants are looking to restructure leases.
 Tenants are checking Landlord credit for stability.
 Shorter term leases from both landlord and occupier.
2009 Market Trends – Landlord/Developer
Landlord/Developer Trends
 Most, if not all, major planned projects have been put
on hold.
 Developers are finding it difficult to raise capital.
 Developers are forced to sell assets to raise capital at
higher cap rates than purchased.
 REITS are raising capital through secondary stock
offerings.
 Leveraged property owners are at a major
disadvantage in this market.
 Defaults are being caused by refinancing
requirements.
2009 Market Trends – Landlord/Developer
Landlord/Developer Trends Cont’d.
 “I will renegotiate a lease for a struggling tenant before
having a vacancy.”
 Landlords attempting to hold asking rates, but offering
aggressive proposals.
 Landlords are very aggressive. “We will find a way to
make the deal.”
 Lease-up shelf times are in the 12-18 month range.
 Landlords are getting out to meet the “go to” brokers.
 Shorter term leases from both landlord and occupier.
2009 Market Trends – Industrial Market
Industrial Market
 Land in most markets is all but dead.
 58 of 62 US industrial markets increased availability over
previous quarter.
 We have witnessed nine consecutive quarters of rising
availability in the US. This trend will continue through 2010.
 Flight to quality and safety is the order of the day.
 Investors are shying away from secondary and tertiary markets.
 Traffic in and out of the global shipping ports was down 20%45% in 2009, but starting to stabilize.
 Big box retailers who accounted for large chunks of absorption
are now giving back this space.
2009 Market Trends – Industrial Market
Industrial Market Cont’d.
 Industrial markets have been able to turn off supply faster than
other product types.
 Rail will continue to see increased demand as transportation
costs rise and roadway congestion increases.
 Construction costs continue to decrease during this downturn.
 Too late to sell, too early to buy
2009 Market Trends – Brokerage
Brokerage
 Qualify the deal more than ever
 Know your clients/customers’ capital structure
 Broker incentives are “in vogue”
 Utilization of a national and global network is now full expected
 Knowing what companies do well in a down cycle is important
 Advisors who can paint a picture of the road ahead will be
valued most
 Leasing teams need to act like an owner
 Brokers are being asked to sign confidentiality agreements to
keep lease rates undisclosed
2009 Market Trends – Brokerage
Brokerage Cont’d.
 In Europe, having only occasionally used advisors, 3pl’s now
outsourcing/partnering (e.g. DHL, TNT, CEVA) – Big
opportunities
 Old Saying: “If you continue to do what you have always done,
you will only get what you have”.
 New Saying: “If you continue to do what you have always done,
you will now lose what you have”.
2010 US Industrial Market Forecast
 Overall availability rates will continue to rise as companies right
size their space needs.
 Many US markets will fluctuate or “bounce along the bottom”
during 2010 in transaction activity levels.
 Manufacturing production will show modest increases in an
effort to replenish very low inventory levels.
 A view or belief of a “light at the end of the tunnel” will have
Landlords reevaluate deep rental concessions for years 2013
and beyond.
 3PL activity will continue to increase as companies look to
better optimize their inventory and supply chain network.
 As business confidence grows, some companies will look to
extend length of lease term or renewal options to benefit from
tenant advantageous market conditions.
Michael Silver, SIOR
First Vice President
Industrial Brokerage Services
CB RICHARD ELLIS, INC.
777 Brickell Ave, Suite 900
Miami, FL 33131
T 305.374.1000
F 305.381.6462
www.cbre.co
m
2009 © CB Richard Ellis. We obtained the information above from sources we believe to be reliable. However, we have
not verified its accuracy and make no guarantee, warranty or representation about it. It is submitted subject to the
possibility of errors, omissions, change of price, rental or other conditions, prior sale, lease or financing, or withdrawal
without notice. We include projections, opinions, assumptions or estimates for example only, and they may not represent
current or future performance of the property. You and your tax and legal advisors should conduct your own investigation
of the property and transaction.