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National - Industrial - 1/1/2008

National - Industrial - 1/1/2008

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Published by Russell Klusas

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Published by: Russell Klusas on Jul 08, 2008
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Real Estate Investment Research
2008 National Industrial Report
 
INDUSTRIAL
 
Midyear 2008 National Industrial Report
To our valued clients:
Modest economic growth continued through early 2008 in spite of housing and credit market turmoil ashealthy export activity, driven by the weak U.S. dollar, offset the drag from housing and reduced domesticbusiness and consumer spending. Expansion is forecast to gain some momentum in the second half of this year asthe positive effects of fiscal and monetary stimuli take hold; however, there are risks present. Current indicatorssuggest the housing market has yet to reach bottom in many markets, and further job losses are likely in the nearterm. The Fed has acted aggressively to minimize the economic downturn, slashing interest rates and pumpingliquidity into the marketplace. Additional rate cuts will not come as willingly, however, as record-high oil pricescontinue to stir inflation concerns and pressure margins for manufacturers and transportation firms.Despite near-term downside risks, there are positive forces at work that should not be overlooked, such asstill-sturdy corporate balance sheets and healthy levels of demand for U.S. goods and services. Furthermore,evidence is emerging that credit markets are starting to stabilize. The previously frozen commercial-mortgagebacked securities (CMBS) market is beginning to thaw, and commercial mortgage spreads have narrowedmodestly. While the yield on the 10-year Treasury remains relatively low, it has ticked up from the first quarter,indicating some restoration of investors’ confidence in financial markets.Industrial owners would be wise to expect reduced absorption and higher vacancies over the short term, andselect markets will experience some overbuilding. A longer-term perspective points to a relatively moderatedownturn in industrial property performance given a healthier supply-demand balance compared to past cycles.Barring any major surprises, job losses should remain moderate over the next few months – a benefit of leanpayrolls going into the downturn. The government’s stimulus package, which includes tax incentives for businessesto purchase new equipment this year, and the Fed’s aggressive actions to improve liquidity also bode well.Similar to other commercial real estate sectors, industrial property sales are down considerably from last year,and price adjustments are occurring based largely on asset quality and location. Industrial property returns are stillfavorable compared to other core commercial real estate sectors, and reduced construction throughout the rest ofthis year will limit the rise in vacancy.To assist you in planning and executing a successful investment strategy, we are pleased to present ourMidyear 2008 National Industrial Report. In addition to national and local coverage, this report features ourNational Industrial Index, a 24-market ranking based on a series of forward-looking supply and demand indicators.We hope you benefit from this tool and the expertise of our industrial investment specialists nationwide.Sincerely,Harvey E. GreenHessam NadjiPresident and Managing DirectorChief Executive OfficerResearch Services
 
Midyear 2008 Report
Midyear 2008 National Industrial Report
NATIONALPERSPECTIVE
Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3National Industrial Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4National Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6National Industrial Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7Capital Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8Investment Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
MARKETOVERVIEWS
Atlanta . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10Chicago . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11Cleveland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12Dallas/Fort Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13Denver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14Detroit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15Fort Lauderdale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16Houston . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17Los Angeles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18Miami . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19Minneapolis-St. Paul . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20New York City-Northern New Jersey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Statistical Summary Table
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22-23
Oakland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24Orange County . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25Philadelphia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26Phoenix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27Portland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28Riverside-San Bernardino . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29Sacramento . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30San Diego . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31San Francisco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32Seattle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33Tampa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34Washington, D.C. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
CLIENTSERVICES
National Office and Industrial Properties Group (NOIPG) . . . . . . . . . . . . . . . . . . . . . . . .36Research Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37Marcus & Millichap Capital Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38Contacts, Sources and Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39Office Locations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40-41
Written by Erica Linn, Senior Analyst, and edited by Hessam Nadji, Managing Director. The Capital Markets section was co-authored byWilliam E. Hughes, Managing Director, Marcus & Millichap Capital Corporation. Additional contributions were made by Marcus &Millichap market analysts and investment brokerage professionals nationwide.

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