Each quarter, Situs RERC surveys hundreds of investors in the U.S. Among other metrics, survey respondents were asked to provide ratings of the investment conditions for different property types. During third quarter 2017, Situs RERC’s investment conditions ratings remained mixed across the property sectors surveyed, but investment conditions improved for most property sectors compared to the previous quarter. It comes as little surprise that industrial warehouse investment conditions continue to be superior to all other property sectors considering the growth in e-commerce and its need for distribution centers.
- The industrial warehouse sector maintained the best investment conditions among the property sectors, increasing to 7.2 (on a 10-point scale) in the third quarter, up from a 6.8 rating in the second quarter.
- Situs RERC’s institutional investment survey respondents indicated that buying industrial warehouse properties during third quarter 2017 was the most ideal. For industrial R&D and flex properties, holding was most popular among respondents.
- Situs RERC’s expected rental growth rates for the warehouse and flex sectors each increased to 3.1 and 2.6 percent, respectively, during third quarter 2017, while the R&D sector decreased to 2.5 percent. Expected expense growth rates were flat for all three sectors at 2.7 percent.