Colliers International Predicts Global Industrial Market Slowdown

“Downshift” is the operative word in industrial real estate worldwide according to a newly released report by Colliers International.”With the global economy anticipated to decelerate in 2008,” the report said, “trade and the movement of goods is expected to show a corresponding downshift.”With fewer goods moving around the world, demand for warehouse/distribution space will decline this year, according to Colliers. The declines in demand will not be catastrophic, however, and so most markets will probably see stable industrial rents, with a few still-in-demand places able to command modest rent growth–such as Beijing and Hong Kong, some European markets, and all the markets of South Africa.In North America, the report noted, most markets will feel the results of the sagging U.S. economy, which might see an anemic 1.6 percent growth this year. Demand for industrial space in some parts of the North America, especially western Canada, with its energy-boom economy, will be up. One of the most expansive industrial markets in North America is in fact Victoria, British Columbia, where rents are currently $U.S.12.24 per square foot, with an anticipated increase this year.Among U.S. cities, the most expensive industrial space is currently Honolulu, at $15.72 per square foot, making it the eighth-most expensive industrial market in the world. Most U.S. industrial markets have stable rental outlooks, according to the Colliers International report, but there are exceptions, such as Detroit, which is suffering from Michigan’s particularly sluggish economy, and Las Vegas, which is seeing the bust-after-boom part of a real estate cycle.In Europe, Euro-zone economies are slowing as well, but the report predicts that the impact on industrial properties will be muted. “European warehouse markets are fairly well positioned to weather a slowdown,” it said. Currently the London (Heathrow) industrial market, at $27.64 per square foot, is the world’s most expensive, besting even Tokyo (Ariake), which stands at $24.51 per square foot.The Asia-Pacific region will retain the strongest demand for industrial properties, with China and India still growing rapidly, according to the report. But a wildcard for that part of the world going forward is the impact of reduced consumer demand for imports in the United States–“all eyes will be on the United States to see how deep and how long the U.S.economic slowdown will be,” Colliers noted. “Many Asia Pacific economies are highly dependent on exports to the United States, although China is also starting to become an important source of demand.”