State of the Industry

What a difference a few weeks can make!  For some time every agent we spoke with was bereft of properties to sell. Then within a few weeks there are so many opportunities it is almost overwhelming. At Expedio we are currently transacting more deals than ever before. But the plethora of opportunities means we simply don’t have time to examine all of them. Accordingly, the more relevant information provided from the outset, makes it more likely that we can give each opportunity due attention.

Earlier in the year  we saw more than a trickle of residential investors examining the industrial space. In the new year we believe that one of the main drivers for industrial investment will be as a hedge against inflation. All the signs are indicating that the inflationary factors facing us now, will translate through to substantial CPI increases over the next year or more. Whilst industrial real estate doesn’t provide a short term hedge (unless CPI rental adjustments are built in) over time most real estate assets have been proven to provide protection against inflation.

Increasingly there is a disconnect between yield and intrinsic value. Often this is a result of a lag in rents keeping up with the market. But as an inflation hedge, today’s rentals are of less significance. What really matters is that over time the intrinsic value of a property continues to rise.

As almost every week we see new record prices being achieved, what we are also seeing is the cream rising to the top. Well located, well maintained and  appropriately configured buildings are achieving the record breaking prices, while poorer quality buildings with design flaws, lack of maintenance or parking etc are more difficult to move. We see this divergence between good buildings, and less than good buildings as a positive trend.