With increased demand for R&D, technology, and telecom space, the industrial market is making a comeback.

Brennan Investment Group of Chicago and Gatehouse Bank, plc of London bought a $155 million portfolio of industrial assets in 12 states in July. According to Real Capital Analytics' third quarter 2012 industrial survey, this investment was one of around ten industrial portfolios purchased in the third quarter of 2012. This 20-property portfolio was 100% leased to 12 tenants at the time of purchase.

"Over the past year and a half, US industrial markets have demonstrated remarkable resilience, with virtually every major market reporting positive absorption and increasing occupancies," Michael Brennan, chairman and managing partner of the Brennan Investment Group, said at the time of the purchase. qatar seal

While not all sub-sectors of the industrial market are doing equally well, RCA's industrial report for the third quarter is still reasonably optimistic. According to the survey, an increase in individual industrial property sales and a decrease in average cap rates indicate that the sector's lagging recovery is finally catching up to the other property forms.

According to RCA, "improving funding conditions and a recent decrease in mortgage rates should also strengthen the positive momentum." Between 2011 and the first half of 2012, the supply of mortgage capital for commercial assets increased, and interest rates fell by at least 25 basis points in the first half of the year.

According to RCA, warehouse properties outperformed the flex sector with $5.2 billion in revenue in the third quarter of 2012, up 12 percent year over year, while flex properties sold for $2.7 billion, around the same as a year ago. The warehouse industry saw a lot of cap rate compression.

However, when looking at the first three quarters of 2012 as a whole, flex properties outperformed warehouse properties. According to RCA, their sales volume of $8.7 billion was up 28 percent year over year, compared to $14 billion for warehouses, which was down 30 percent year over year.

Overall, $22.6 billion in industrial assets of all types is sold in the first three quarters of 2012, a 15% decrease year over year, but excluding portfolio sales from 2011, the year-over-year increase is 19%.

For the first three quarters of 2012, average commercial real estate pricing was $62 per square foot, up 14% year over year, and $84 per square foot for major markets, up 15% year over year. Cap rates were 7.6 percent and 7%, respectively, down 21 basis points and 51 basis points from the previous year.

R&D/tech/telecom assets and data centers were the best-performing sub-sector for the industrial industry in the first three quarters of 2012, with sales volume of $2.2 billion, up over 95 percent year-over-year. The average price per square foot in this category was $132, up 30% year over year, while the cap rate was 7.4%, down nine basis points year over year.