Industrial property’s ‘spectacular’ run coming to end: analysts

While industrial landlords are set to benefit from rising rental income driven by record low vacancy rates on the eastern seaboard – CIP fund manager Jesse Curtis said on Tuesday that “positive leasing activity and rental growth would support valuations” – they will not be able to count on big valuation gains to bolster their balance sheets.

Some may even record property values falls as cap rates rise, a point highlighted by David Libling, chief executive at industrial property specialist Pipeclay Lawson, which expects yields to rise a further 150 basis points.

Matt Webb, a director of industrial at valuation firm m3property, said he was not surprised at the latest update from CIP given transaction activity had slowed down and deal metrics were being re-assessed.

“Industrial property been on an almost unprecedented run for the last seven years, but yields are now at record lows and interest rates are rising,” Mr Webb said.