Business Growth for Commercial Office & Warehouse Distribution Space Continues for 2017 , By Bill Stankiewicz, Regional Vice President for A&S KINARD

Retailers are targeting a wide and diverse range of markets in 2016, with core Western European markets at the top of the agenda. Despite worries about the Chinese and U.S. economies, retailers will still see potential in these markets and are looking to make inroads there in the coming year right now. 

Colliers International had a pretty good year in 2015 as did other local Savannah Commercial Real-Estate Companies, its first as an independent public company. Revenues were $1.7 billion up 9% (18% in local currency), EBITDA was $181 million up 24% (up 34% in local currency) and EPS was $2.29 per share, up 25% over the prior year. These are tremendous results by any measure. Jay Hennick is a great leader there & openly shares plans for the future.

Construction activity increases as Georgia Port Authority continues to boost the local economy. 
-    Vacancy Rate - less than 1% for bulk warehouse space
-    Lease Rate - $4.23 PSF
-    Space for 100,000 sq ft & larger parcels very tight
-    Construction - 3.8+ MSF

A key risk for the global economy in 2017 is that low growth, currency weakness and rising U.S. interest rates will erupt into a financial crisis in emerging markets.  In the U.S.office rentals, San Jose, Dallas, Philadelphia, Boston and Columbus are likely to see rental growth estimated at above 5-6% per year. Each city has a different economic story, but all are supported by the growth of the U.S. economy, particularly the technology sector, and a relatively muted new supply pipeline. Hot markets in Asia Pacific are more scarce. The clear exceptions to this are Bangalore (CBD), Tokyo, Sydney (CBD) and Hong Kong (CBD), which are expected to see average rental growth of at least 4.4% per annum over the next two years.

Cost-saving initiatives like offshoring are driving demand from business process companies in Bangalore. Office demand in Tokyo is being driven by the expansion and upgrade needs of domestic corporations. Sydney is benefiting from employment growth as well as from the demolition and conversion of office properties to residential properties. Retailers and mall operators are adopting new strategies to draw in shoppers, which, coupled with stronger consumer sentiment, should increase demand for retail space.  

In the U.S., in particular Savannah, developers are responding to the demand for smaller warehouse spaces meant to solve the last-mile problem and filling that niche with new Class A facilities that are also smaller (or easier to divide into smaller spaces) and located closer to the urban core. A leader in this area has been Outsource Logistics that continues its growth in Savannah & Valdosta, Georgia.  They are building both large & scale-able facilities for companies that need to grow and or shrink during periods of high velocity.

These light industrial properties are representing a larger portion of total development—up to a third of all buildings under construction—a departure from previous years, when virtually all development was concentrated in the big-box bulk warehouse segment.  

Call me 24 x 7 if I can help you in any way here in the Southeast or any part of our USA.  Bill Stankiewicz, Phone: 1.404.750.3200

Best regards,

Bill Stankiewicz

Regional Vice President

A&S Kinard

BStankiewicz@askinard.com

www.askinard.com

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