December 19, 2007—Strong industrial markets, strong rent gains, and a growing interest toward medical office buildings brought an upbeat perspective to a survey of the nation’s top commercial developers, despite concerns that the economy and property market fundamentals are losing steam.
The thirteenth “Vital Signs” survey, conducted in September by the National Association of Industrial and Office Properties (NAIOP) and compiled by CB Richard Ellis Investments, brought together the assessments of 200 members of NAIOP’s National Forums–senior-level managers and owners of commercial real estate.
Overall, industrial markets remain strong and office market rents have recovered from previous years, although future rent outlook has weakened in both sectors, reveals the report. Demand has emerged as the top industrial issue, with concern for overbuilding becoming more prevalent.
More than half of the respondents indicated that rents in their local industrial markets increased during the past year. Sixty-two percent indicated office rents have increased during the past year.
Two years ago, the majority of survey respondents projected increasing costs of all construction components, with a particularly strong consensus that land and labor costs were rising. Today, only about half see labor costs increasing, while about a third expect accelerating land, steel, concrete, and sheetrock expenses.
Considered the benchmark among commercial developers, the formerly semi-annual survey will now be completed on an annual basis. For complete survey results, see the “Vital Signs” report (.pdf file) on the NAIOP Web site.
