Stronger Dollar a Plus for Imports

Stronger Dollar a Plus for Imports
globest         BREA, CA—The rise in interest rates could further the strength of the US dollar, which will give US firms more purchasing power on imports, Unire Real Estate Group’s director of client services Griffin Cogorno tells GlobeSt.com. Given the Fed’s recent decision about a rate hike, we spoke exclusively with Cogorno about this topic as well as property-, asset- and construction-managementtrends to watch for in 2016. GlobeSt.com: What were the greatest challenges in property, asset and construction management in 2015? Cogorno: 2015 posed some challenges for everyone in the marketplace, which was explosive this year.Developers were pushing to complete projects, tenants were chasing limited inventory, owners were able to hold the upper hand in lease negotiations and land remained very scarce. Demand continued to be a major story as tenants and owners chased a lack of inventory, which pushed caps lower and rents higher. Value-add funds moved to more secondary locations and tertiary locations, chasing yield as vacancy continued to decline to record lows in core and core-minus locations. As 2015 comes to a close, it appears that 2016 will continue with a similar story. GlobeSt.com: How do you see these challenges shifting in 2016?  Cogorno: In 2016, we are expecting demand to continue to outpace supply. Now that the Fedhas officially raised interest rates for the first time since 2006, cap rates should subsequently rise with interest rates, since the cost of funds will rise and directly affect the ROI for owners, funds,REITs and equity players. These players will be paying close attention to their cost of funds with an eye on the Fed’s since they plan to raise rates throughout 2016, with respect to their pro forma models. The rise in interest rates could further the strength of the US dollar, which will give US firms more purchasing power on imports. An increase in imports (containers with goods) directly effects the US industrial core markets since logistics, distribution, retail and all other companies will require additional square footage to house the increase in imports. More cargo containers coming onto American soil puts pressure on the core markets, which will continue to drive demand in a very competitive market. GlobeSt.com: Tell us more about how the increased purchasing power for imports could impact the industrial sector. Cogorno: In addition to the above highlighted notes, it is important to note that the industrial sector relies on the purchasing of goods from the consumer and supplier. Fifty percent of all goods brought into the ports of Los Angeles and Long Beach stay in the Southern California. The other 50% is distributed throughout the US by rail or truck. As the ports continue to unload more TEUs (20-foot equivalent containers), the demand to house and distribute those goods increases. Each TEU is responsible for 15 square feet of industrial space. As consumers and suppliers purchase more due to a strong dollar, the industrial market is directly affected with an increase in demand as well. As the dollar continues to strengthen against other currencies, US companies can buy more for less than they could a year or two ago. This increase in purchasing power will require additional industrial space to house these goods. There is a reason why large retailers like Home Depot, Lowe’s, Whirlpool, Skechers, etc., have multi-million-square-foot facilities in SoCal and throughout the US. Click here for GlobeSt.

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Guiding a company in the commercial real estate space is never easy even in the best of times. In times of disruption and upheaval, as the last two years have been, it can be downright difficult. And we can expect another year of choppy waters as inflation grips our economy, to say nothing of the uncertainty brought on by the Russian-Ukrainian war. It is these years where identifying and acknowledging the top leaders in our industry matter the most.

MARK HARRYMAN & GRIFFIN COGORNO Unire Real Estate Group was founded in 2000 to provide property, transaction, construction and asset management services to owners and tenants of institutional-quality commercial real estate. Mark Harryman founded the company and now serves as CEO and principal. With more than 30 years of experience in commercial real estate, Harryman effectively serves as an executive-level point of contact for clients. As president, Griffin Cogorno directs the entrepreneurial growth strategy for the firm and he is responsible for growing the platform throughout the West Coast. Cogorno has more than 15 years of industry experience and has held positions with JP Morgan, Chase Bank and the O’Donnell Group. Unire Real Estate Group currently manages more than 50 million square feet of industrial and office assets throughout Northern California, Southern California and Las Vegas. Harryman is described as a leader and mentor who provides feedback, guidance and support. Cogorno, who joined the firm in 2014, provides fresh ideas and new perspectives and has the ability to see the big picture while understanding the small details. As a strong team, the two professionals continue to articulate the firm’s mission and cultivate a company culture that supports long-term growth. The growth of the company during the past 21 years speaks to their leadership abilities, having increased assets under management from roughly one million square feet with one client at inception, to more than 50 million square feet with 18 clients today. The firm has been recognized as a top workplace in Orange County on multiple occasions.

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Brea, CA:
675 Placentia Avenue, Suite 200

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Del Mar, CA:
12230 El Camino Real, Suite 200

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883 N. Shoreline Boulevard, Suite D220

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714-990-2100

info@uniregroup.com

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