[ 1/1/1998 ]  By: Rachael Hedgcoth
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Demand for Space Driving up Industrial Rentals
Strong demand and shrinking vacancy rates drove rental rates for standard industrial space up a robust 3 percent during the second half of 1997, according to the Grubb & Ellis Industrial Market Trends report.

Rents are highest in the West Coast and Pacific Northwest regions, where standard industrial and R&D rents rose by 5 percent and 3.8 percent, respectively, in the second half of 1997. Rates were influenced by booming, technology-driven economies from Seattle, Wash., down the coast to San Jose, Calif., according to Grubb & Ellis.

Rates are lowest in the Mountain/Southwest and Southeast regions, where abundant land and lenient building regulations encourage new supply.

In Dallas and Atlanta -- the number one and two markets for space completions in 1997 -- rental rates for standard industrial space average $3.66 and $3.62 respectively, more than 20 percent under the U.S. average.

Office, Industrial Markets Tighten
The nation's office and industrial vacancy rates continue to drop, according to Grubb & Ellis, a national an international real estate firm.

In its Office Market Trends report, the company forecasts that demand for office will continue to outpace additional building for the remainder of 1998. It warns, however, that strong demand for office space should not tempt lenders and developers to let their guards down or relax their standards.

Additionally, the company feels that if construction levels continue at a rapid pace, and if the economy cools off, then overbuilding could become problematic.

According to the Industrial Market Trends report, the amount of space delivered to markets increased by a steep 42 percent in 1997. Even so, vacancy rates continued to shrink.

Grubb & Ellis believes growth in new space hit a peak in 1997, and that completions should taper off slightly in 1998. Additionally, the company forecasts that the market's performance this year should mirror the performance of the general economy: stable, moderate growth.

Tornado Alley' Blows Away the Competition in Housing Costs
If you're searching for affordable housing to go along with your corporate move, you might want to consider Tornado Alley. Yes, that's right, the region where states like Oklahoma, Kansas and Texas are often the target of a tornado's fury.

The cities were identified in the 1998 study of executive housing costs by E&Y Kenneth Leventhal Real Estate Group.

Markets were ranked from the most to least expensive, based on "mid-management" housing requirements, which for this study are defined as amenitized four-bedroom single family homes and large, luxury apartments.

Key findings of the study included the disparities in housing market costs. To illustrate the range, the study found that housing takes 17 percent of median family income in Oklahoma City, Okla., compared to nearly 44 percent of the median family income in metropolitan New York.

The study also found that the West Coast still harbors the least affordable housing nationwide. However, not every area in the region takes a disproportionate percentage of family income. In the Sacramento and Riverside-San Bernardino areas, housing requires less than 24 percent of the median family income.

AFFORDABILITY OF U.S. EXECUTIVE HOUSING MARKETS

Source: CB Richard Ellis

Ranking assesses 75 urban areas.

*All reported housing cost figures reflect a percentage of local market median family income.

The composite figure is a simple average of the single family home and rental components.

NOTE: Single family home costs are based on the cost of purchasing an ammenitized home, as reported in
Coldwell Banker's 1998 Home Price Comparison Index. Rental costs are based on lease rates for luxury rentals as compiled and reported by the CB Richard Ellis National Real Estate Index.