CBRE Has Optimistic Outlook for Industrial Sector

CB Richard Ellis (CBRE) has published its Industrial Leading Indicator Report for the first quarter of 2010 which has a favorable outlook for the industrial real estate market in the US.

To summarize briefly: The sector was not hit with the problems of the office and retail markets. Demand for space has continued and they expect the vacancies to peak at 15% and then drop to around 10%. Another reason is that industrial property owners tend not to leverage as much as owners in the other sectors. They expect that the industrial market will start to recover as we come out of the recession in 2012 and that the next three years will be years of high demand for industrial space as businesses gear up again.

With increasing consumer spending, firms will begin hiring again in 2010 and continue to rebuild their inventories. The demand for industrial space will rebound, it is expected to turn slightly positive by year-end 2010 but the average quarterly pace of demand will be lower than that seen during the housing boom with quarterly net absorption averaging only 30 million square feet through the end of 2011. Over the following three years however as consumers and firms make up for consumption deferred throughout the downturn, demand for industrial space will match the pace set in the boom period from 2004 through 2007 before settling into a more stable pattern in the years beyond 2015.

The report does not appear to be online, so I can’t link to it. If you are interested in the report, send an email to gaminoff at aminoff dot com and I will forward a copy of the report to you.

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