INDUSTRIAL REAL ESTATE GUIDE
What is driving the demand for industrial properties ?
The Sacramento industrial market is as strong as it ’ s been during my 35-year career . We have historically low vacancies and continued demand in all tenant sectors . … We are experiencing continued rent growth with more compression of ( capitalization ) rates … ( which is being caused by ) supply and demand for space , increase in construction costs , more capital chasing industrial properties as an investment and Sacramento becoming an institutional investment arena , … which is increasing property values across all industrial property classifications .
MARK DEMETRE Executive Vice President Colliers
What kinds of industrial projects are the most active right now ?
Larger big box distribution centers ( owned by companies like Amazon , Walmart and SC Johnson ) are the most active spec development . E-commerce needs larger class A buildings , plus our market doesn ’ t have much — if any — existing available space in large blocks with good clear height . … We don ’ t foresee any let-down in demand and there are a few new developments that will come on line this year ( from developers ) Badiee , Phelan , Harsch and Oates in Metro Airpark … ( as well as ) Dermody in Southport and McClellan Park off Interstate 80 .
How did the pandemic affect your industry ?
We are experiencing the strongest industrial market ( locally and nationally ) in history . The momentum and trajectory prior to the pandemic was certainly there and all indicators pointing in the right direction , but the pandemic poured fuel on the fire . That fuel came in two significant octanes : racing gas and 91-octane . E-commerce was the high-octane racing gas — the online shopping phenomenon was growing steadily and contributing to the industrial market ’ s success , but when all of a sudden online was the only alternative , demand completely outstripped supply . Secondly , your 91-octane fuel came from supply chain shortcomings . The realization that higher inventories must be kept and / or held here in the U . S . caught a lot of people off-guard and left them rethinking their inventory management .
RYAN DEANGELIS Senior Vice President CBRE
How has the market changed in recent months ?
… In a relatively short period of time , we have seen a local market that was nearly all regional developers / investors to now a market with a large presence by REITs ( real estate investment trusts ), institutional equity and national developers . All of this is good for the region , it will heighten the region ’ s stature , bring new and large construction projects , and continue to diversify our regional economy and employment base . … I ’ d like to think the big players are finally seeing what we have all known for years — Sacramento exhibits a good quality of life ! However , it ’ s more than just that . I believe it ’ s a healthy mix of good geography , good labor supply , good new assets being built , which tend to attract quality occupants , and a growing population that needs to be served .
84 comstocksmag . com | February 2022