Exports Offer Lifeline as Ike Aftermath, Lehman Aftershocks Loom

In a business climate hammered by a slowing economy, the Gulf Coast storms and the weekend’s failure of Lehman Brothers, the improving U.S. export market is arguably the main factor keeping demand for distribution and manufacturing space afloat. According to figures released on Thursday by the U.S. Commerce Department’s International Trade Administration, exports through July rose 18.3 percent. Canada led the top four buyers of U.S.-produced goods markets, tallying $158.7 billion through the first seven months. Mexico, China and Japan rounded out the rest of the top four.The next few weeks will also start to reveal the repercussions of the destruction inflicted over the weekend by Hurricane Ike on Greater Houston’s industrial inventory, which totals more than 320 million square feet. This year, the Houston area has been one of nation’s most active markets for both leasing and new industrial construction. At mid-year, developers were building 5.1 million square feet of product in Houston, according to Cushman & Wakefield Inc. That is on top of 4.4 million square feet of new facilities already completed during the first half of the year. Ike could also stall Houston’s industrial leasing, which tallied 9.1 million square feet—a pace that trailed only Chicago, the Inland Empire and Los Angeles. As the industrial sector awaits the release of third-quarter statistics in the next few weeks, it seems likely that major indicators will stay flat or decline, as expected. And it remains to be seen whether 11 out of 62 markets that showed positive absorption of 1 million square feet or more can keep up the pace. According to Cushman & Wakefield Inc., those markets included Atlanta; Baltimore; Central New Jersey; Cleveland; Dallas; Denver; Hampton Roads, Va.; Houston; Indianapolis; the Inland Empire of Southern California; Kansas City, Mo.; Louisville, Ky.; Pennsylvania’s I-78 distribution corridor; and Richmond, Va. Meanwhile, nine industrial markets experienced negative absorption of at least 1 million square feet during the first half.