Investment volumes totalled $54
By Roxanne James

US Industrial Real Estate 'Firing on All Cylinders'

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Investment in the American industrial sector is set to reach 2007 peak levels of $61bn, according to CBRE.

The US industrial market is firing on all cylinders

A combination of increased trade, industrial production, employment and consumer consumption will drive growth in 2015, buoyed further by significant expansion in Q4 2014 that kick-started the upward trend.

Jeanette Rice, head of the Americas investment research department of CBRE said: "The US industrial market is firing on all cylinders. The low cost of energy and a strong dollar are contributing towards increased business investment, production, employment and consumer consumption. These diverse sources of growth have combined with local economic factors to generate demand for industrial space not seen since before the financial crisis".

Investment volumes totalled $54 in 2014, 13% up on the previous year, indicating that if growth continues at the same pace this year, the 2015 volume will reach the peak of $61bn.

Q4 2014 saw a healthy increase in transaction volumes, reaching $16.1bn in industrial investment revenues, the third best-performing quarter in the past 14 years.

Foreign investors spent $1.8bn on industrial assets in 2014, with the largest number of buyers coming from Canada, the United Arab Emirates and Norway with Chicago being the largest target market.

Residential real estate in Chicago remained relatively flat in 2014 although increased industrial investment is likely to revive the market this year. As buyer confidence grows and lending restrictions decrease, it is likely that condominium sales in particular will see an uptick in sales and pricing in 2015.

David Wolf, president of Related Realty said: "There's strong demand but new construction has been nearly non-existent since the downturn and condo inventory is at its lowest level since tracking began in 1997. That spells opportunity for developers and we're starting to see new projects announced".

It is expected that 2015 will see an increase of homebuyers for investment purposes as the rental market continues to gather momentum. The 'millennial' generation are showing a national preference for renting over homeownership, driving construction specifically for that market and generating investment opportunities.

Other areas enjoying increased foreign investment in residential markets are New York and Florida with Michigan's Detroit city recording a dramatic increase in buyer interest in 2014.

 

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