AMB Property Corp. (AMB), a leading real estate investment trust (REIT), recently unveiled a new research report on the outlook for the industrial real estate market in the U.S. The in-depth study integrated customer-provided insights with key macroeconomic variables to measure and forecast business activity and industrial real estate demand, and concluded that improving economic conditions will eventually fuel a recovery in industrial real estate and consequently raise rents to more sustainable levels.
The research report indicated that the U.S. industrial real estate market has reached a point of inflection in the third quarter of fiscal 2010. Growing customer interests in new build-to-suit development projects across the country suggested that market fundamentals were gradually improving. In addition, leasing decisions that were earlier postponed due to volatility in the markets were gradually coming off the shelf. Consequently, rent levels are expected to return to more normal levels.
The study revealed that overall business activity measured 60.3 in September (up from 56.3 in August), while industrial space utilization measured 54.2. Inbound container traffic had double-digit growth during the quarter, signifying that demand for industrial real estate was rebounding, thereby offering a positive outlook for 2010 and beyond.
AMB is a leading industrial real estate company, with a strong portfolio of warehouses and distribution facilities in some of the busiest distribution markets in the world. It operates as a vertically integrated company and enjoys large economies of scale through an extensive knowledge of domestic and international industrial real estate markets. AMB’s properties are located in supply-constrained infill markets in close proximity to airports, seaports and ground transportation facilities, which enable a swift distribution of customers’ products.
We maintain our Neutral recommendation on AMB, which presently has a Zacks #3 Rank that translates into a short-term ‘Hold’ recommendation and indicates that the stock is expected to perform in line with the overall U.S.equity market for the next 1−3 months.
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