In a recent survey, members of the National Association of Industrial and Office Properties (NAIOP), including developers, owners, investors and/or asset managers, described some definite trends within the industry.
Technology has taken hold with 92% of survey participants using the Internet or e-mail routinely in their business, primarily for research. Two years ago, fewer than half of the respondents were proficient on the Internet. Concomitant with increased usage of new technology is a major growth spurt in the total square footage on average of both owned and managed properties for NAIOP members. Since the last membership survey in 1997, members have tripled their property base with 13.6 million square feet of owned property and 10.4 million square feet under management.
Urban areas have shown the most dramatic growth benchmarks, where industrial ownership is expected to rise by 47 percent over the next two years. Office property management in cities will boom with an expected growth rate of 71 percent. And despite its scarcity, raw land in urban venues will sustain a 44 percent jump in ownership.
Biggest growth rate in suburban areas is expected in the management of raw land, which should increase by 72 percent. Both industrial ownership and property management will see gains of more than 20 percent in the suburbs.
Merger activity has plateaued. While actual merger activity has remained constant with 18 percent of respondents indicating that their companies had been involved in a merger or acquisition during the past 24 months, it is down significantly from projections of two years ago when 22 percent said that they expected their companies to be involved in mergers. Currently, only 13 percent of NAIOP members expect future mergers or acquisitions for their companies.
Taxes issues — capital gains, tax treatment of tenant improvements, and the depreciation recapture tax rate
are deemed to have the biggest negative impact on the business of development, according to the survey. Developers also are concerned about wetland permits and delays in securing project approvals.
Thomas J. Bisacquino, NAIOP President, commented, “This membership survey has provided NAIOP and the industry with information not previously available from any source. The data paint a picture of a robust industry adapting to current trends and optimistic about the future.”
