Barry Bain Director, GRS | Centaur (630)

Barry Bain
Director, GRS | Centaur
(630) 690-4335

As GRS Group has pointed out, the industrial sector of commercial real estate is faring well lately.

Politics aside, there is evidence that this will continue in the foreseeable future. Most of what is discussed in commercial real estate forums in relation to the presidential-administration change is talk of tax reform and how that will impact the industry.

Whether or not there are political implications involved in the process, Toyota is spending just over $1.3 billion on a factory in Kentucky. It will obviously assist the construction industry and reportedly employ an additional 700 workers.

Toyota is supposedly set to spend $10 billion on factories in the United States over the next five years. When these facilities are built and/or renovated, plenty of ancillary businesses that provide additional services for those companies tend to open nearby, creating an industrial cluster of smaller outfits skirting around the main factory.

In the retail world, Walmart is a strong analogy. When one of its stores opens in a shopping center, it attracts several other tenants that want to feed off of the major foot traffic that a successful big-box store attracts.

From an industrial standpoint, one could consider airplane-manufacturer Boeing as a similar example. Formerly headquartered just south of downtown Seattle, but still with major facilities in that area, there are plenty of companies that cluster around the main plant, which impact commercial real estate leasing, and development, in those locales.

When a developer builds an industrial park, and Amazon is the main tenant, as an anchor, others are bound to follow because of the infrastructure that is built around that multi-use land.

The fact that one of the most important auto manufacturers in the world is spending more than a billion dollars to invest in a factory is a big deal. If this trend continues, with other companies, the commercial real estate market in the industrial sector is bound to improve. Coupling the increase of distribution centers, and their importance to this asset class, with more manufacturing, will only help the industry. More development equals more jobs, which also equates to an increasingly healthy economy that delivers items to consumers, whether they are manufactured or distributed in the United States.