NPC Industrial Markets Panel
A panel composed of Andrew Ebbott, Chief Investment Officer, Cabot Properties; James Clewlow, Chief Investment Officer, CenterPoint Properties; and Donald Schoenheider, Vice President, City Manager and Co-Leader National Industrial Practice Group, Liberty Property Trust met on February 25 in Chicago to discuss the state of industrial markets. Over 100 commercial real estate professionals attended.

Key Indicators Are Improving

Market research by Colliers International and CBRE found that 2013 was the best year for industrial markets since 2007 with many indicators giving investors reasons to be optimistic:

  • Net absorption has been positive for about four years.
  • The national average of industrial availability went down to 11.3% during the 4th quarter of 2013.
  • The overall vacancy for Chicagoland was near pre-recession lows, ending 2013 at around 8.5% or 9%.
  • The national average net asking rent rate finished the year up at $5.74/SF, which is a 3% increase over 2012. Nationwide, rents ranged from a low of $2.63/SF in Memphis, TN to a high of $19/SF in San Francisco. The average asking rent rates in Chicago edged slightly higher to around $4.38/SF.
  • The national sales activity volume increased to almost $46 billion, which is up 12% over 2012 levels, while the Chicagoland sales activity increased 14% to $2.1 billion with prices ranging from $45/SF to $95/SF.
  • At the end of 2013 the national average cap rate held steady at 7.5% with the average Chicagoland cap rate ending slightly below at 7.1%.

Industrial Demand and Rents Expected to Continue to Improveth warehouse

Although investment demand remained strongest for assets in primary distribution and port markets such as Chicago, Los Angeles, Dallas, and Houston, industrial markets are picking up nationwide. “Things certainly seem to be heading in the right direction,” said Andy Ebbott, Chief Investment Officer of Cabot Properties. The company is seeing more tenant demand and rents are also firming up. “At the end of 2013, there was around 63 to 65 million square feet of industrial speculative development, which is less than 1% of the total industrial volume,” commented Mr. Schoenheider. Liberty believes that rents will continue to grow and over supply is not expected to overtake the rent growth.

Large Projects in the Works for Cabot, CenterPoint, and Liberty

Cabot is now on Investment Fund IV with plans to invest in the next three to four years all across the U.S. including in Chicago and LA, but also in secondary markets like Phoenix or Cincinnati.

CenterPoint has generally invested in major coastal and inland port logistics markets. “Anywhere there is a port or intermodal, CenterPoint is there,” said Mr. Clewlow. This includes Seattle, Oakland, LA, New Jersey, Houston, Savannah, and Norfolk, but the company is also excited about their other intermodal related holdings. CenterPoint currently has up to 6,000 acres located in Crete, Joliet and Elwood, IL.

Liberty just finished construction of a 1.2-million SF building located in Bethlehem, PA, for Liberty also has a 1.7-million SF building under construction in Pennsylvania for Procter & Gamble. Mr. Schoenheider reported that ”logistics is changing and companies are trying to figure out how to squeeze money out of their supply chains.”

Liberty Expands its Industrial Portfolio with the Acquisition of Cabot Industrial Value Fund III

Primarily an office building investor, Liberty’s acquisition strategy changed in 2007, as the company shifted its focus to industrial buildings and kept some office assets. In October 2013, Liberty completed the acquisition of the operating partnership of Cabot Industrial Value Fund III, for a purchase price of $1.475 billion. The transaction included approximately 23-million SF and 177 properties located in 24 markets and the United Kingdom. The strategic acquisition of Cabot’s Fund was ideal for Liberty because 63% of the assets were already in markets where Liberty owned buildings, and 84% of the assets were in markets where Liberty owned buildings or had plans to in the next five years. This was a transformational acquisition for Liberty as it gave them ownership in 24 markets – from 14 markets pre-acquisition – including 8 of the top 10 markets for industrial properties.

Demand for Warehouses is Increasing

E-commerce business is continuing to affect industrial markets as larger buildings are needed to house growing inventories. “Inventory is being taken away from traditional brick-and-mortar stores and being placed in large warehouses,” confirmed Mr. Ebbott.

LEED-certified and EnergyStar Buildings – A Focus for Liberty

Efficiency and sustainability will continue to play a very important role for Liberty. The company built more LEED-certified buildings and has more EnergyStar rated buildings than any other developer in the country. “Our clients are asking for it and it is the right thing to do,” said Donald Schoenheider.


For more information about this panel discussion, please contact Ben Bartel, PE, CEM, LEED AP, Principal, at or 847-421-6120.

About National Property Consulting Group, LLC

NPC is a building assessment and advisory firm that specializes in performing property condition assessments and energy consulting focusing on the industrial, hospitality, and housing sectors. For more information about National Property Consulting Group (NPC), please visit or contact:

Ben Bartel, PE, LEED AP
Principal | 847.421.6120

Pete Madson, PE
Principal | 513.478.6569