By Summey Orr, managing partner of Hartman Simons

Note: This post originally appeared on the Atlanta Business Chronicle's Real Talk blog.

Summey Orr

As the media focuses attention on trouble in Atlanta commercial real estate, those of us looking for good news might have an unlikely place to start: the industrial sector.

During the upcycles of real estate, industrial property tends to be the ugly stepbrother of the more glitzy retail and office sectors. Warehouses and distribution centers don’t majestically rise 1,000 feet in the air, they don’t boast trendy restaurants on their ground floors, and they don’t creep into your subconscious as you drive past them several times a week (well, unless you’re just driving around industrial parks all week, which is a troubling habit, generally speaking).

But by many accounts, industrial real estate might be coming out of the ditch a little sooner than some of its real estate brethren. How, and why, would this occur?

Here’s an explanation that a notable Atlanta industrial developer gave me back in April 2009. He said, “Industrial real estate relies on a company’s real estate manager going to his or her boss in the fourth quarter and saying, ‘We need more space. Let’s get a warehouse expansion in our budget for next year. ‘ Now, nobody in his right mind will make that pitch in 2009. Not only that, but I doubt things will have changed enough by the fourth quarter of 2010 to give anyone the courage to ask for that in their 2011 budget.”

“What we’re waiting for, really, is the corporate world’s budgeting process during the fourth quarter of 2011,” the developer continued. “By then, either the economy will have improved enough that management will feel comfortable asking for more space, or the economy will not have gotten markedly worse, and managers will decide they are so desperate for more room that it at least makes sense to ask. So, I think we’ll have a little activity in 2011, more in 2012 and maybe even a pretty good 2013.”


Having just weathered the annual January “Economic Forecast Breakfast Season,” I’m aware that it is near heresy to make any sort of economic prediction without a host of graphs, charts and statistics. (It also helps if you can work in the word “synergistic” a lot, I’ve noticed).

Any time I hear an economic analysis that is, instead, based on common sense, or how people really think and act, I’m reminded of the scene in the movie “Trading Places,” where Eddie Murphy’s Billy Ray Valentine character explains to his bosses that the price of pork belly futures is about to plummet, not because of market factors, but because the average guy holding pork belly contracts is starting to panic because prices aren’t going up, Christmas is coming, and he needs cash to be able buy his son the “G.I. Joe with the Kung Fu grip.”

It was offbeat (and funny), but Billy Ray turned out to be right. And whether the explanation is scientific or colloquial, the industrial market seems to be behaving just as my friend had predicted.

Of course, there are statistics to back up the industrial rise. The Atlanta industrial market enjoyed a strong 2011, posting a net absorption of 5.4 million square feet, tying it with Indianapolis for the fourth-highest mark in the country, according to Cassidy Turley. The vacancy rate declined from 15.6 percent at the end of 2010 to 14.5 percent one year later, and the average asking rent climbed .3 percent to $3.50 per square foot.

In addition to fancy stats, dirt is moving, too. Atlanta-based industrial developer IDI is building a 650,000-square-foot speculative industrial facility west of the city, the first major speculative industrial building to be constructed in Atlanta in several years. Nothing says, “I feel good about the future” quite as loudly as putting up a big building with an “if we build it, they will come” rationale.

Is it a revolution? Well, maybe not, but it’s starting to sound like an evolution, from a stagnant market into one that’s a little more lively, and every positive market evolution starts with some good news, one market sector at a time.

Maybe it’s industrial’s time to lead the next good-news wave.