12/21/2015 | By Sarah Borchersen-Keto
Phil Hawkins, CEO of DCT Industrial Trust, Inc. (NYSE: DCT), joined REIT.com for a CEO Spotlight video interview at REITWorld 2015: NAREIT’s Annual Convention for All Things REIT at the Wynn Las Vegas.
DCT focuses on bulk distribution and light industrial properties located in high-volume distribution markets in the United States.
Hawkins discussed the trends he sees in industrial real estate regarding supply and demand.
“I feel excellent. I’m very bullish on our business,” he said.
Developers, who are funded primarily by institutional equity, are very knowledgeable about the markets and are making disciplined decisions.
“Demand has never been better,” Hawkins said. Across the board, distribution tenants are growing, vacancy levels are low and rents are growing, he noted. Hawkins said he expects the current conditions to remain in place for some time.
Hawkins also commented on DCT’s development activity.
“It’s been an outstanding time to be a developer,” he said. As an example, Hawkins pointed out that DCT’s development portfolio was 7 percent leased in the summer. Since then, the portfolio has increased by $300 million in starts to a total of $565 million and is now 91 percent leased.
Hawkins noted that because development is predominantly funded by equity, low-leverage developers like DCT are unlikely to see a significant impact on costs from higher interest rates. In general, Hawkins said he does not think that interest rates will be a big factor in terms of development decisions: “If interest rates are going up because the economy is doing better, that bodes well for demand.”
As for development levels in 2016, Hawkins said that because DCT’s development starts were so strong in 2015, “it’s hard for us at this early stage to set expectations that would be higher than 2015.” Most likely, DCT’s development starts will be below 2015 levels, according to Hawkins.