Q: The industrial market seems to be gaining momentum. Is that your experience and, if so, what’s driving that momentum?
Roberson: That’s correct, demand is on the rise. Some of this is pent-up demand from the recession. During this time, many companies gained in efficiency and, as a result, now have stronger balance sheets. They are looking to deploy capital on new projects and take advantage of an improving economy and low interest rates. The result is an increase in activity but we have limited supply.
Q: Is that lack of supply getting the attention of developers?
Roberson: It’s starting to. There are some developers who were talking about speculative development, but not many. While the capital markets have loosened up, lenders are still hesitant to underwrite speculative development.
Q: What types of buildings are in the greatest demand right now?
Roberson: Buildings that have tall ceilings (24 feet-plus), an ample number of docks – i.e., 1 dock per 10,000 square feet of building space — in close proximity to the interstate and in good condition. There’s less interest in “value-add” buildings. It’s prudent for building owners and landlords to address building condition issues before putting their property on the market. Curb appeal is not just for residential properties.
Q: A couple of significant deals were announced in East Tennessee recently. A metallurgical company called CVMR is moving its operations from Toronto to Oak Ridge and President Obama visited Clinton to announce a public-private partnership that will promote advanced manufacturing. What impact do those kinds of announcements have on the industrial property market, if any?
Roberson: Activity breeds activity. Tennessee has had a plethora of announcements lately and it will be to the benefit of the whole state. The economic multiplier of the CVMR announcement and the activity surrounding advanced materials is significant. Many business sectors will benefit from these announcements. Specifically, the industrial real estate market will see an increase in demand from companies looking to open new facilities to take advantage of the innovation and research and development happening here.