Analysis by Barbara Byrne Denham
INDUSTRIAL SECTOR: A MIXED PICTURE
The pandemic is now into its fifth month, and the subsequent shelter-in-place measures have crippled the economy, removing 14.7 million jobs (net) as of June. Still, the drop in economic activity did not significantly affect most commercial real estate statistics in the second quarter. Indeed, the CARES Act and Payment Protection Program replaced lost income for many consumers and employers.
The underlying data does, however, show that the industrial sector was mixed in the quarter: warehouse/distribution held up better than other property types as e-commerce sales continued to grow throughout the pandemic, but the flex/R&D space saw the biggest jump in vacancy in the quarter, more than any other property type. This was somewhat consistent with other national statistics that parallel the industrial sector; that is, international trade fell, the net decline in warehouse jobs was 1.8% as of June, but manufacturing activity increased in June. [We include statistics on trade, e-commerce, and manufacturing activity in the Other Industrial Measures section below]. Still, as coronavirus cases have surged in recent weeks, the end to the pandemic looks ever more elusive and the outlook for the economy grows cloudier…
Barbara Byrne Denham is a Senior Economist in the research and economics department at REIS, the team responsible for the firm’s market forecasting, valuation, and portfolio analytics services. Throughout her 20-year career, Barbara has written a number of white papers on the commercial real estate market.