Industrial Market Forecast February 2009
According to the data provided by NAR and TWR in 2008, net industrial space absorption was negative, as the US occupied industrial stock declined by 57.2 million sq. ft. That was a quite negative performance, if it is taken into account that in 2007 net industrial space absorption was positive at 120 million sq. ft. The negative absorption occurred at a time that 179 million sq. ft. of new industrial space was added to the US industrial space stock. Despite the weakening demand, the new industrial space delivered in 2008 was by 41.6% higher than the 126.8 million sq. ft. delivered in 2007. As a result of the negative absorption and the rising completions, the industrial vacancy rate increased from 9.4% in 2007 to 10.4% in 2008. With the softening market, industrial rents registered a minor decline of 0.8 %.
The NAR/TWR latest industrial market forecast predict even more negative developments for the US industrial property market in 2009. In particular, it is predicted that net absorption will be by far more negative, with occupied industrial space declining by 148 million sq. ft. Completions of new industrial space are expected to start responding to the weakening demand and drop drastically in 2009 to 69.5 million sq. ft. (61.3% drop compared to 2008). The negative absorption and the additions of new space in the market are expected to push the national industrial vacancy rate up to 12% in 2009 (from 10.4% in 2008). The further weakening of the market in 2009 is expected to put significant pressure on landlords and force them to reduce rents for industrial space by 4.1% on average.
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