2017 US Industrial Midyear Outlook
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Cap rates in many of the nation’s premier metros compressed, motivating buyers to move capital into secondary and tertiary markets. With a cap rate spread of 350 basis points between primary and tertiary markets, yield-seeking buyers may favor smaller markets.
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Soaring demand for industrial properties continues this year as rising rents and robust fundamentals motivate buyers. Strong property performance, though, is leading owners to hold onto assets, likely limiting sales volume this year as investors are met with the challenge of finding suitable properties to buy.
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Industrial demand will remain strong this year as businesses continue to expand into warehousing and distribution space, pushing net absorption past construction to compress vacancy 30 basis points. This year will mark the second consecutive year that supply growth surpasses 200 million square feet.
