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Industrial Outlook Remains Strong, But Headwinds Are Stirring

U.S. industrial vacancy ended 2019 at 5.1%, one of the lowest rates on record. However, Colliers International’s Amanda Ortiz points out that the figure represents an uptick of nine basis points over the third quarter, and a 14 bps-increase compared to year-end 2018.

“The overall outlook for industrial real estate remains optimistic with further positive absorption, low vacancy rates and upward pressure on asking rental rates,” writes Ortiz, national director of industrial research at Colliers. She cites “growing consumer appetite to purchase goods online” as an ongoing spur to demand.

“However, there are some headwinds picking up,” according to Ortiz in the firm’s newly-issued industrial outlook report. “The greatest threats to industrial demand look to be slowing domestic economic momentum and the continued uncertainty caused by trade tensions.”

In particular, U.S. nonfarm payrolls added 2.3 million jobs in 2019, down from 2.4 million the year prior. Projected GDP growth for 2020 is 1.7%, down from an expected 2.3% in 2019 and below 2.9% in 2018.

Additionally, after hitting a high of 3.9% in 2018, industrial production fell to 0.8% in 2019 and is forecasted to remain similarly muted in 2020.

“Taken together, these slowdowns in external indicators for industrial real estate demand stem from weakening domestic demand and trade concerns, and if the trend continues, industrial real estate demand will feel the impact,” Ortiz writes.

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About Paul Bubny

Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 13-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism. In this capacity, he oversees daily operations while also reporting on both local/regional markets and national trends, covering individual transactions across all property types, as well as delving into broader subject matter. He produces 15-20 daily news stories per day and works with the Connect team and clients to develop longer-form content, ranging from Q&As to thought-leadership pieces. Prior to joining Connect, Paul was Managing Editor for both Real Estate Forum and at American Lawyer Media, where he oversaw operations at both publications while also producing daily news and feature-length articles. His tenure in B2B publishing stretches back into the print era, and he has served as Editor in Chief on four national trade publications. Since 1999, Paul has volunteered as the newsletter editor of passenger rail advocacy groups (one national, one local).

  • ◦Economy
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