John Stewart, senior analyst with Green Street Advisors, joined REIT.com for a video interview at REITWorld 2012: NAREIT’s Annual Convention for All Things REIT at the Manchester Grand Hyatt in San Diego.
Green Street has been a leader in real estate and REIT research for over 25 years. Stewart is a research analyst covering the industrial and lab space property sectors, and he said the recovery in the industrial REIT sector should continue at a gradual pace.
He said the strong performance the sector has seen in 2012 is most likely a result of prior underperformance turned in during the second half of 2011.
“For 2013, our house forecast calls for a high probability that property prices in the industrial sector will be higher in six months,” Stewart said. “Provided that interest rates don’t rise, which is a big wild card, we think there is a good possibility that we could have room to run in the industrial sector.”
When asked to predict what the dominant trend in the industrial sector will likely be in the coming year, Stewart said everything currently hinges on the impending “fiscal cliff.”
“Getting past the ‘fiscal cliff’ is clearly the biggest issue facing the macro economy,” Stewart said.
At the real estate level, Stewart pointed to taxes in California in the wake of the recent election as key issue.
“As we deal with the changing political climate, that will obviously have an impact on real estate values—and in particular industrial portfolios like Prologis (NYSE: PLD) and PS Business Parks (NYSE: PSB) in California,” Stewart said.
At the company level, Stewart said Prologis has two large majority stakes in portfolios for sale, one in Japan and one in Europe, and seeing those transactions come to fruition will be a major development in the industrial space in 2013.