Industrial Insights - July 2022
The Big Reprice
The Federal Reserve's June meeting sparked significant market adjustments across real estate. Three main outcomes emerged: deals that closed on schedule, properties being repriced downward, and buyers exiting the market entirely.
Major institutional investors have adopted a wait-and-see approach through the July 26-27 FOMC meeting. This uncertainty particularly impacts developers managing "higher land, construction pricing, and now larger carrying costs." Despite these headwinds, tenant demand remains robust.
Tenants and Users
The firm completed leasing activities across multiple states for an Orange County-based client:
- 55,400 SF renewal in Tampa, Florida - 32,555 SF new lease in Denver, Colorado - 91,000 SF lease preparation in Fullerton, California - 48,500 SF relocation to San Antonio, Texas
Each market presents distinct dynamics around development pipelines, permitting timelines, and tax structures. Local work includes monthly renewals ranging from under 2,000 SF to multi-thousand square foot properties.
Landlord Leasing
Limited inventory continues as properties lease quickly. Recent completions included a 47,286 SF industrial lease in Fontana for an institutional investor and a third renewal of 6,866 SF in Chino.
Investment Sales
Two 1031 exchanges closed for a high-net-worth family:
- Guidepost Montessori (Rancho Santa Margarita, CA): 8,309 SF, $8.1M - Kitchen United (Frisco, TX): 6,569 SF, $8.3M
A retail acquisition in Santa Ana transformed an irregularly-shaped parcel into developable land suitable for "three-story mixed-use development."
Personal Investments
The author identified multi-tenant industrial portfolios in Dallas and Houston with 5.5-6.0% entry cap rates, featuring lease expiration strategies enabling rent growth within 24-36 months.