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Mar. 03, 2014

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INTERNATIONAL MARITIME www.joc.com THE JOURNAL OF COMMERCE 89 By Bill Mongelluzzo DEMAND FOR INDUSTRIAL real estate in the U.S. is increasing, vacancy rates are drop- ping and construction is at a 60-year low. Add it up and it equals increasing rental rates. Craig Meyer, president of Jones Lang LaSalle's industrial broker- age team, advises clients that are looking for ware- house space in hot markets such as Southern Califor- nia, northern New Jersey and Dallas to focus on the property that best suits their needs and to move decisively to close the deal. During and immedi- ately after the 2008-09 economic recession, retailers, manufacturers and importers would send out multiple requests for rental quotes, looking for a suitable property at the best price. With a national vacancy rate of 12 percent during the recession, and 9.4 per- cent as recently as the fourth quarter of 2011, that was a good strategy. Net absorption of industrial space in 2013 increased 17 percent year-over-year, however, with the fourth quarter of 2013 marking the 15th consecutive quarter of positive net absorption, Meyer said. The recession hangover is lingering among developers, though. Historically, industrial construction averaged 220 million square feet a year, but today only 112 million square feet is under construction, he said. Despite growing demand and con- stricted supply, however, the industrial real estate market is by no means frothy. Build- ing on speculation is restrained. Although demand should accelerate over the next few years, the current market is relatively With construction at a 60-year low, the U.S. industrial real estate market is tightening and shippers are looking inland 21 percent year-over-year, but remain well below pre-recession highs or even recent peaks in 2011. And there could be more bad news as the P3 vessel-sharing alliance among the world's biggest ocean carriers — Maersk Line, Medi- terranean Shipping Co. and CMA CGM — looks certain to get regulatory approvals within months. Christian Niewswandt, a banker with Hamburg's HSH Nordbank, the world's big- gest ship fi nancier, has expressed fears the P3 Network will redeliver large numbers of vessels that will be surplus to requirements when the three member lines coordinate their services. The 345 ships that currently operate the carriers' three key east-west services will be whittled down to a sin- gle 255-vessel fleet run from an office in London. In all, there will be a surplus of approximately 150 ships in the P3 Net- work, taking into account ships on order, half of which are chartered and will be the fi rst to go. Maersk has said it will trim its charter fl eet as its 20 18,270-TEU Triple E vessels come on stream, which is expected to create a 70-30 split between owned and chartered tonnage compared with the current 50-50 balance. The global fl eet's makeup also is chang- ing in the wake of the steep slump in spot charter rates, with carriers increasing their share of total capacity afl oat and ships on order at the expense of charter ship owners. But even as the German industry, apart from the top names, refrains from new investments, the Greeks are piling into the container ship sector, as traditional dry bulk owners such as Navios, Oceanbulk and Capi- tal Maritime join established players such Danaos and Costamare. The Greek container ship fleet, worth around $10 billion, trails Germany's $32.7 bil- lion fl eet, according to VesselsValue.com, an online intelligence and information service. But the gap is sure to narrow — and probably rapidly — in the coming months. JOC Contact Bruce Barnard at brucebarnard@hotmail.com. Asking rents are up about 2.5 percent in secondary markets and 6.7 percent in high-demand markets. SPACING OUT

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