Like the larger economy, today's corporate real estate markets are slippery stuff.

But sussing out those markets was the task at hand for panelists at one major presentation at IAMC's Apr. 19-23 Professional Forum in Scottsdale, Ariz.

"The fundamentals are solid for the U.S. industrial real estate environment," said Gary Weiss, senior vice president and national director of First Industrial Realty Trust. Industrial occupancy in major markets is above 90 percent, and the business spending forecast for 2008 is good, he added at the Apr. 22nd luncheon presentation, "On the Money: The Direction of Global Corporate Real Estate Markets."

"The U.S. industrial market had a record volume of US$56.8 billion in 2007 versus $50.7 billion in 2006," said Weiss.

But the American market cooled significantly in early 2008, he noted.

"Volume in the U.S. industrial market slowed considerably in first the two months of 2008 versus the same period a year ago," said Weiss, whose company is the nation's largest provider of diversified industrial real estate. "For January and February of 2007, the volume was $7.7 billion. For those same two months in 2008, the volume was $3.2 billion. "Volume in the U.S. industrial market slowed considerably in first the two months of 2008 versus the same period a year ago."

"There's a slower pace of transactions from start to close," he continued. "Many are on sidelines waiting for the end to fallout. Highly leveraged investors are being squeezed by the current credit crunch."

Weiss, however, added, "I think demand will pick up. The recent interest-rate decreases by the Federal Reserve Board should help."

On the other hand, current market uncertainties can boost the cost-efficiencies of companies that are already in desirable space, said Todd Yates, senior vice president of The Alter Group.

"There's a good opportunity now for occupiers," said Yates, whose company is one of the country's leading commercial real estate firms. "If you're an occupier, you want to see your buildings filled up now. Down the road, you'll be paying more, with the cost of construction going up."

Panelists (l-r) Garry Weiss, First Industrial Realty Trust; Bob Duncan, Structured Equity Advisors; and Todd Yates, The Alter Group

The Scottsdale discussion, however, was shadowed by one obvious question: When will capital markets calm down? And that question was posed to the panel.

"I think the capital markets will calm down in six months," said Robert Duncan, managing principal of Structured Equity Advisors. "It depends on the marketplace. But I think things will calm down late this year or early next year."

"The cycle will come out, but we don't know when yet," said Weiss. "People will dump assets, take losses and then start over next year. Watch the housing market. More equilibrium will dovetail with consumer spending."

Yates concurred on the indefinite time frame for a change in the market cycle.

"We don't know when markets will calm down," he said. "There's a short-term lull in development, and there will be pent-up demand."

"Pension funds and insurance companies" will supply a lot of that pent-up demand, said Weiss. "They're attracted to industrial as they seek to meet actuarial return requirements."

With the current development let-up, some expanding firms are encountering challenges in finding the kind of space they prefer, said Yates.

"We've found that the deals are getting bigger," he said. "In some markets, it's more difficult to find good sites. Residential developers have gotten it all.

"We're finding fewer quality sites that are close to the interstate or port," Yates continued. "Companies then have to weigh the equation in deciding where to locate."

The current economic uncertainties are also increasing the amount of elasticity that end users are looking for in their space, according to Weiss.

"Occupiers are now looking for flexibility, at the need to adapt," he said. "That's one of the most fundamental drivers."

Even in the current uncertain market, expanding firms can find significant opportunities, asserted Duncan, whose company directly links institutional capital market investors with occupiers.

"Environmentally challenged sites are prime candidates for co-redevelopment," said Duncan, whose clientele includes Chrysler, Ford, GM, Honeywell, IKEA, Michelin, RCA and TNT Logistics.

Duncan described one deal in which he linked an investor and tenant in co-redeveloping such a property. The investor did the re-development of the environmentally challenged site, he said. Then the partner company in the project occupied the space in a long-term lease deal.

The industrial market is also feeling increased impact from the current crisis in the residential lending market.

"Credit is going to become more and more important" in industrial projects, said Yates.

Credit, he continued, is more readily available in what Yates called "smile locations" - an area stretching "from New York City around the edge of the U.S. and up to Northern California. In those areas, there's growth in the population and industrial markets.

"In those smile locations, you're usually looking at five-year credit. Outside that, you're looking at longer-term credit needs."

Yates, however, added, "Most of our customers are located outside the smile locations. The lowest rents are outside those areas."