Austin Industrial Landlord Outlook

The fundamentals of the industrial sector are currently out of balance, but improvements seem to be on the way.  For the first time in over three years, there is no new product under construction.  Without the threat of new development on the horizon, landlords can begin to assess the damage.  The development "shut down", coupled with the fact that fewer tenants are putting space back on the market, is a huge step towards realizing some positive absorption. 

The 1st couple of months of 2010 have been considerably slow from a transaction standpoint.  Very few significant leases have been signed and no investment sales have occurred.  Given the amount of positive “business outlook” feedback we receive from our tenant base, this is surprising.  With few exceptions, our manufacturing tenants are experiencing strong growth.  Most of the growth, they believe, comes from the rebuilding of depleted inventories during the last year.  Until these companies believe in the long-term health of their customers, they are going to be very reluctant to lease additional space.