Speaking with REIT.com during last month's NAREIT Washington Leadership Forum, Monmouth Real Estate Investment Corporation (NYSE: MNR) Chief Operating Officer Michael Landy discussed the improving fundamentals in the U.S. industrial real estate sector.
"Net absorption rates have been positive for six consecutive quarters," Landy said. "Vacancy rates are no longer in the double digits. Consequently, rents have stabilized and are even trending higher in some markets."
Landy added that the industrial sector is highly correlated to the broad economy and as the economy continues to improve, so will the amount of new development in the industrial space. He said meaningful new construction should return sooner rather than later.
"This is because, of all the property types, industrial is the most responsive to changes in the broad economy," Landy said. "There was virtually no new construction throughout the downturn, and that resulted in a lot of pent-up demand."
The continued proliferation of e-commerce has also had a dramatic impact on the industrial sector. Landy said Monmouth's largest tenant is Federal Express, which has benefitted greatly from the increasing amount of commerce that is taking place online.
"Monmouth Real Estate owns over 8 million square feet of gross leasable area. That is comprised of 69 properties in 25 states. We are currently 95 percent occupied, and e-commerce is without a doubt a contributing factor in driving our strong performance."