Monthly Archives: February 2015

Property Valuation is an important aspect of Real Estate Business

The three-year slide in the US manufacturing sector, aggravated by the outsourcing of jobs overseas, has hurt the industrial market. The vacancy rate rose from a shade under 6 percent in the first quarter of 2001 to just above 10 percent in the first quarter of 2003, although this is well below the record 13.7 percent that occurred in 1992 following the last recession.

Rental rates were soft through 2003. The average asking rent for warehouse-distribution space slid 8.3 percent with most of this drop concentrated in the first half of the year, while the average R&D-flex rent slid by 3.7 percent. But 2003 brought some stability to the industrial market and, by the end of the year, some signs of recovery. The vacancy rate began a slow descent, ending the year at 9.7 percent.

Net absorption, which turned positive in the second quarter of 2002, began to accelerate in the second half of 2003, topping space completions for the first time in three years.

Property valuation has ended up particularly pricey as more institutional financial specialists have entered the stockpiling toward oneself business. Sturdy consumer spending supported demand for distribution space from consumer products companies and their third party logistics outsourcing partners, benefiting Riverside-San Bernardino, New Jersey and other industrial markets serving major population centers. While problems in the manufacturing sector have weakened manufacturers accounted for less than one quarter of industrial leasing activity in the past three years. In 2003, companies engaged in trade, transportation and utilities accounted for nearly half of all activity.

One sign of concern is an early increase in the amount of speculative space under construction which has risen from a nadir of 53 million square feet in mid-2002 to above 60 million square feet at the end of 2003. Nearly 13 million square feet of this total is being built in Los Angeles County and the adjacent Riverside-San Bernardino area where burgeoning trade with China and other Pacific Rim nations has lit a fire under demand and created spot shortages of product.