SAN FRANCISCO, March 18 /PRNewswire-FirstCall/ -- AMB Property
Corporation® (NYSE: AMB), a leading owner, operator and developer
of global industrial real estate, today announced the release of a
new research report titled "Down But Not Out: The Outlook for
Industrial Rent Growth in the U.S."
The report analyzes the relationship between rent growth and
market fundamentals. Specifically, it examines current U.S.
industrial rents, which are down 20-30% from their 2008 peak and
below levels that support new construction. The leading indicators
of customer demand suggest that market fundamentals are
improving and that rent levels will return to more normalized
levels.
"Our research concludes that improving economic conditions will
fuel a recovery in demand for industrial real estate and therefore
raise rents to more sustainable levels. Currently, the consensus
forecast for global trade and production suggests that more than
500 million square feet of demand could be realized in the next few
years, driving the national availability rate to equilibrium in
2012," said David Twist, AMB's vice
president, Research.
Summary of Findings:
- While a number of industrial developments have been put on hold
during the economic downturn, new construction will resume when
rents are at or nearing replacement-cost-justified rents – the
rents required to finance and pay for the profitable construction
of a new building.
- The relationship between industrial space availability and the
change in market rent over several cycles is a negative correlation
of 0.89, indicating that when supply of available space is high,
rent growth is muted and conversely when supply is tight, rents
increase.
- Production, trade and inventories are the principal drivers of
demand for industrial real estate, together explaining more than
80% of the variation in historical demand. As such, the respective
forecasts for these leading indicators can be used to estimate the
future magnitude and timing of demand for industrial real
estate.
- The leading indicators of demand for industrial real estate are
rebounding and the outlook for 2010 and beyond are very strong.
Consensus forecast for global trade and production suggests that
more then 500 million square feet of demand could be realized
globally in the next three years, driving the availability rate to
equilibrium levels in 2012.
AMB's research reports can be downloaded from the company's
website at www.amb.com/global_capabilities/research.html.
AMB Property Corporation.® Local partner to global
trade.™
AMB Property Corporation® is a leading owner, operator and
developer of global industrial real estate, focused on major hub
and gateway distribution markets in the Americas, Europe and Asia. As of December
31, 2009, AMB owned, or had investments in, on a
consolidated basis or through unconsolidated joint ventures,
properties and development projects expected to total approximately
155.1 million square feet (14.4 million square meters) in 47
markets within 14 countries. AMB invests in properties located
predominantly in the infill submarkets of its targeted markets. The
company's portfolio comprises High Throughput Distribution®
facilities—industrial properties built for speed and located near
airports, seaports and ground transportation systems.
AMB's press releases are available on the company website at
www.amb.com or by contacting the Investor Relations department at
+1 415 394 9000.
Some of the information included in this press release contains
forward-looking statements, such as those related to improving
market fundamentals, recovery in demand for industrial real estate,
rent growth to sustainable and normalized levels, forecasts for
global trade and production and demand, national availability
rates, new construction timing, relationship between industrial
space availability and market rent and production, trade and
inventories as leading indicators of demand, which are made
pursuant to the safe-harbor provisions of Section 21E of the
Securities Exchange Act of 1934, as amended, and Section 27A
of the Securities Act of 1933, as amended. Because these
forward-looking statements involve risks and uncertainties, there
are important factors that could cause our actual results to differ
materially from those in the forward-looking statements, and you
should not rely on the forward-looking statements as predictions of
future events. The events or circumstances reflected in
forward-looking statements might not occur. You can identify
forward-looking statements by the use of forward-looking
terminology such as "believes," "expects," "may," "will," "should,"
"seeks," "approximately," "intends," "plans," "pro forma,"
"estimates" or "anticipates" or the negative of these words and
phrases or similar words or phrases. You can also identify
forward-looking statements by discussions of strategy, plans or
intentions. Forward-looking statements are necessarily dependent on
assumptions, data or methods that may be incorrect or imprecise and
we may not be able to realize them. We caution you not to place
undue reliance on forward-looking statements, which reflect our
analysis only and speak only as of the date of this report or the
dates indicated in the statements. We assume no obligation to
update or supplement forward-looking statements. The following
factors, among others, could cause actual results and future events
to differ materially from those set forth or contemplated in the
forward-looking statements: changes in general economic conditions
in California, the U.S. or
globally (including financial market fluctuations), global trade or
in the real estate sector (including risks relating to decreasing
real estate valuations and impairment charges); risks associated
with using debt to fund the company's business activities,
including refinancing and interest rate risks (including inflation
risks); the company's failure to obtain, renew, or extend necessary
financing or access the debt or equity markets; the company's
failure to maintain its current credit agency ratings or comply
with its debt covenants; risks related to the company's obligations
in the event of certain defaults under co-investment venture and
other debt; risks associated with equity and debt securities
financings and issuances (including the risk of dilution); defaults
on or non-renewal of leases by customers or renewal at lower than
expected rent or failure to lease at all or on expected terms;
difficulties in identifying properties, portfolios of properties,
or interests in real-estate related entities or platforms to
acquire and in effecting acquisitions on advantageous terms and the
failure of acquisitions to perform as the company expects; unknown
liabilities acquired in connection with the acquired properties,
portfolios of properties, or interests in real-estate related
entities; the company's failure to successfully integrate acquired
properties and operations; risks and uncertainties affecting
property development, redevelopment and value-added conversion
(including construction delays, cost overruns, the company's
inability to obtain necessary permits and financing, the company's
inability to lease properties at all or at favorable rents and
terms, and public opposition to these activities); the company's
failure to set up additional funds, attract additional investment
in existing funds or to contribute properties to its co-investment
ventures due to such factors as its inability to acquire, develop,
or lease properties that meet the investment criteria of such
ventures, or the co-investment ventures' inability to access debt
and equity capital to pay for property contributions or their
allocation of available capital to cover other capital
requirements; risks and uncertainties relating to the disposition
of properties to third parties and the company's ability to effect
such transactions on advantageous terms and to timely reinvest
proceeds from any such dispositions; risks of doing business
internationally and global expansion, including unfamiliarity with
the new markets and currency and hedging risks; risks of changing
personnel and roles; risks related to suspending, reducing or
changing the company's dividends; losses in excess of the company's
insurance coverage; changes in local, state and federal laws and
regulatory requirements, including changes in real estate, tax and
zoning laws; increases in real property tax rates; risks associated
with the company's tax structuring; increases in interest rates and
operating costs or greater than expected capital expenditures;
environmental uncertainties; risks related to natural disasters;
and our failure to qualify and maintain our status as a real estate
investment trust. Our success also depends upon economic
trends generally, various market conditions and fluctuations and
those other risk factors discussed under the heading "Risk Factors"
and elsewhere in our most recent annual report on Form 10-K for the
year ended December 31, 2009.
SOURCE AMB Property Corporation