Speaker: Industrial Sector Will Get Through Downturn

EAST RUTHERFORD, NJ-Hamid Moghadam acknowledges that the real estate industry is facing a rough economic patch but insists that it’s a cyclical occurrence. “You can almost set your watch to them,” the chairman and CEO of AMB Property Corp. said of downturns, speaking here at I.con, the National Association of Industrial and Office Properties industrial convention. “Fundamentals are better than any downturn I can remember.”

Though he sees negative absorption of space over the first six months of the year, Moghadam predicted that rents will continue to increase in sought-after locales. “I think we’re going to come out of this in better shape than most places,” he said, referring to New Jersey’s high-volume ports.

San Francisco-based AMB, which operates 147.7 million sf of industrial space in 14 countries has room for growth, even. Moghadam said that the company is looking to expand in Brazil and could consider Chile and Argentina as future markets.

One aspect of the industry as a whole that seems to be expanding is sustainable building, according to I.con speakers. Developers are starting to put solar panels on warehouse roofs so that their buildings turn into energy sources, and some are looking at placing their projects closer to ports and other transportation centers in efforts to cut back the amount of fuel used to transport products.

But some tenants are still slow to join the push because of the perceived costs of green buildings, said Michael Laffey, a CB Richard Ellis director. “I’ve seen more skepticism than interest or more questions than answers,” he said.

Though it might seem far off in the future, the industry could start pushing for multi-level industrial products in the US that are now seen in countries like Japan to save space, said Aaron Brinkley, AMB’s director of sustainability programs. “As land-price pressure increases, you might see this sort of facility creep out of Japan, he said.