How is the industrial sector faring, finance-wise?
Just fine, thanks. Ask Jack Fraker, executive vice president of CB Richard Ellis, who works in the company’s Institutional Group – which has sold 175 million square feet of property in 45 cities and Mexico. He does not see any “tremendous move in cap rates in the near term.” He observed that the economy is recovering, the population is growing more rapidly than Europe’s and these consumers need houses, refrigerators and other goods, which bodes well for industrial. Some pension funds have strict parameters for investing in industrial real estate, Fraker explained. They seek brand-new, single-tenant, state-of-the-art facilities with long-term leases. But they may accept a higher level of risk, including older buildings that don’t match all their criteria, but that compete well in their submarket. Flex and R&D properties are providing the best returns now – 10 to 12 percent, he said – because there has been volatility in this sector; and there is still an opportunity to acquire property
