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New Industrial Listings Far Outnumber Sales

Some $2.1 billion of new listings over-shadow $266 million in sales. An April report from Real Capital Analytics says growing inventory of unsold product may mean the sector's level of distress is mounting.

By John McCloud | Updated on May 27, 2009

NEW YORK CITY-US markets saw some $2.1 billion in new industrial property sales listings in April, but sales totaled a mere $266 million, according to a new report from Real Capital Analytics. The approximately 8 to 1 ratio of new listings to sales is even higher than the 6 to 1 figure for the entire January through April period, indicating the sector is witnessing a precarious build-up of for-sale inventory that could have a dramatic impact on pricing.

Given that owners that don’t need to sell would typically not bring assets to market under current conditions, unless they felt they had no choice, Real Capital Analysts believes the growing imbalance may reflect an increase in the number of potentially distressed properties. The industrial sector currently accounts for the lowest volume of distressed properties among all major property sectors, with only $2.4 billion of assets in distress compared to $30.6 billion for retail, $17.9 billion for office, $18.7 billion for multifamily, $13.1 billion for development site and $11.3 billion for hotel.

But more than half the industrial amount, or $1.3 billion, has been added since January, suggesting the financial problems that beset the other sectors have begun to catch up with industrial as well. The report says the mountain of unsold property is almost certain to boost distress levels dramatically. The manufacturing sector is facing the lowest amount of trouble so far, while flex assets are seeing slightly higher incidents of default compared to warehouse properties. Real Capital says the chances of improved sales appear to be hampered by sellers’ reluctance to lower prices.

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