Industrial Sector Leading Recovery Most indications are that industrial real estate points to healthy near-term growth. With very little new construction expected to hit the market anytime soon, users will be forced to look at in-place inventory which will reduce the vacancy rates and push rental rates higher later this year. This is particularly good news given the markets have been hit hard over the past 24 months with tenants being offered many concessions and rock-bottom rental rates.
During the second quarter of 2010, there has been only 106,000 square feet of negative absorption and no change to the 10.8 percent area vacancy rate. However, leasing activity is improving according to Grubb & Ellis|Gundaker Commercial industrial brokers. Existing product will need to be leased before any new developments can be justified.
One notable second quarter deal involved a one year lease of a 500,000-square-foot distribution center in Sauget, Illinois to Proctor & Gamble.
The good news is that the St. Louis industrial market does shows signs of improving, which is a reversal of the previous two years.
