Uncertainty in the global economy will put a drag on U.S. real estate in 2012, but industrial space will see demand spike, especially in larger cities where global trade is on the rise, according to an annual forecast by Grubb & Ellis Co.
The industrial sector, which includes factories, warehouses and research centers, is a bright spot in the firm’s relatively cautious outlook for the year.
Atlanta ranked No. 8 among U.S. cities for industrial real estate investment opportunities, largely thanks to its significant trade volumes, the forecast said. Los Angeles, with the largest container port in the country, took the top spot.
Industrial vacancy rates fell to 9.5 percent in 2011. Buildings were snapped up more than three times faster than in the previous year as the market healed from the previous few years.
This year’s increase will be a more modest 15 percent, Santa Ana, Calif.-based Grubb & Ellis predicted, with large blocks of distribution and warehouse space leading the way.
“The greatest milestone of 2011 was the lease-up of all the space vacated during the recession,” said Robert Bach, the firm’s senior vice president and chief economist. “The lack of new deliveries funneled demand to existing properties, giving the market time to heal.”
Other sectors also showed opportunities. Grubb & Ellis expects a stronger office market in 2012 after a measured recovery in 2011, though the Southeast was among the worst-performing regions in the sector last year.
Retail lagged other property sectors as consumers pinched pennies in view of uncertainty in the housing markets. The report sees recovery in 2012, but not enough to push up lease rates or to keep struggling landlords from pursuing unconventional tenants to fill space.