April 19, 2018
An extended economic growth cycle and a rise in e-commerce are fueling increased demand for U.S. industrial & logistics (I&L) real estate, with no near-term end in sight. I&L demand historically has been correlated to overall U.S. economic growth cycles that typically have lasted for seven to eight years since the 1960s. Industrial real estate tends to lag economic recovery by two years. The economy last exited recession in 2009, but industrial real estate didn’t bottom out until 2011 when rents started to rise.
In recent years, e-commerce sales growth has caused a fundamental shift in goods fulfilment from retail stores to warehouses. This has created a new demand paradigm that provides durability and substantial growth potential for I&L real estate. While most top industrial markets are well into the expansion or maturation phases of the current cycle, they could remain there for an extended time if positive fundamentals persist.