LOS ANGELES—Ecommerce may be the most talked about driver in the industrial sector, but it certainly isn't the only driver. Outside of the ecommerce world, the industrial sector is booming with niche markets sprouting up and creating new opportunities for investors, according to Erik Foster, principal and practice leader of industrial capital markets at Avison Young. Foster is speaking on the trends to watch panel at the upcoming NAIOP I.CON conference on June 10 and 11, along with Owen Kean, senior director at American Chemistry Council; Luis Gutierrez, president of Prologis Latin America; and Thomas Tunstall, Ph.D., research director at University of Texas at San Antonio Institute for Economic Development. While preparing for the panel, Foster sat down with us to share his insights on emerging market trends, explaining that there is a lot happening outside of the ecommerce movement.  

“Everybody wants to talk about big buildings and big distribution markets, but there are other things that are presenting themselves in the marketplace,” he tells GlobeSt.com. “From a capital markets and investment perspective, we really need to grasp the fact that industrial assets are one of the mainstays of investors' portfolios, and with that, it is not just your grandfather's warehouse. It is food-grade buildings; it is freezer-cooler buildings; it is data centers; it is truck terminals. There are many facets and many different kinds of assets that are being combined to make investment portfolios for the modern industrial investor.”

Foster explains that industrial investors' portfolios are becoming more and more targeted to niche markets, noting an example of a European investor for which he recently transacted almost 2 million square feet of manufacturing buildings in secondary markets in the United States. Foster says it is a deal that would never have happened even five years ago, but is happening today because demand is so strong across industrial niches that investors outside of the US are willing to risk the potential downside. “Because of the growth that has gone on in the US, the on-shoring of manufacturing, and the macro trend on the US being the safe place to invest, investors are really looking at all asset classes within the industrial sector,” adds Foster.

This, of course, isn't to say that investors aren't still scrambling to get ahold of top-tier assets in top-tier markets, but that the industrial investment class is broadening. “The capital is always going to be there for the best buildings in the best locations, but now we are finding that there is capital that wants a greater return and is willing to go out a little further, and consequently are looking at different asset classes,” Foster adds. “We are seeing tangible rent growth all across the spectrum. That leads a lot of investors to be bullish in their outlook of the different asset classes.”

And, Foster expects to see this broad demand continue through 2015, even as interest rates rise, which he sees happening in the next three to six months. “We think the market will continue to be strong, although I don't know how much it is going to increase,” he explains. “For the remainder of 2015, I think it will be a steady and strong investment market.”

Foster lending his market expertise to the trends to watch panel on June 11 at NAIOP's I.Con conference. Join us in Long Beach to hear more insights from Foster and his fellow panelists on these industrial trends.