The industrial market in 2018 and 2019? It should be two more strong years throughout North America.
Cushman & Wakefield recently released its 2018-2019 industrial forecast, and reported that the North American industrial market should post 655 million square feet of net absorption.
If that figure is reached, it would rank among the strongest period for industrial real estate on record. In fact, that figure would rank second only to 2014-2016, when net industrial absorption hit 833 million square feet.
Activity, though, won’t be spread evenly across the country. Cushman & Wakefield reported that just 10 North American markets will account for 42 percent of the total net absorption to be registered in North America through 2019. Three of those big markets are in the Midwest, Chicago, Indianapolis and Nashville.
The other seven busy markets are forecast to be the Inland Empire, Dallas, New Jersey, Toronto, the Pennsylvania distribution corridor, Atlanta and Phoenix.
While the North American industrial market certainly isn’t poised for a crash, the signs do point to an increase in vacancy rates. Cushman & Wakefield says that North America’s industrial vacancy rate will rise 40 basis points to 5.9 percent by the end of 2019.
That rise might seem concerning. But that vacancy rate is still well below the 20-year historical average of a 7.9 percent North American industrial vacancy rate.
All of the increase in vacancy will come in the United States, according to Cushman & Wakefield. The company predicts that the U.S. industrial rate will rise 50 basis points to 5.9 percent for all industrial product types.
The Cushman & Wakefield report also took a look at some technology that will make the industrial market more efficient. Specifically, the report looks at advancements in autonomous trucking technology.
Cushman reports that an array of technologies has already transformed trucks. This includes adaptive cruise control that relies on forward-looking radar to maintain a set following distance and lane-departure warnings that audibly warn drivers if their trucks drift from a lane.
Collision-mitigation systems that rely on radar, lasers or cameras to both alert drivers and act automatically to possible crash situations have also improved, according to Cushman & Wakefield.
Telematics is playing an important role in the distribution system, too. With telematics devices, trucks can automatically collect information on drivers’ hours-of-service records and fuel consumption.
Finally, there’s self-driving trucks. Cushman & Wakefield reported that most of the major truck manufacturers, including Paccar, Daimler and Volvo, and newer companies such as Waymo, Otto and Tesla, are testing autonomous technology. Cushman, though, says that self-driving technology won’t eliminate drivers, but that drivers will remain a critical link in the supply chain for many years.
Cushman & Wakefield’s report also focuses on the growing importance of cold storage, driven, of course, by the shipping of food, pharmaceuticals and perishable products that required refrigerated or frozen storage. Cushman says that rising demand for fresh, organic and gluten-free foods will require a more versatile food-storage system, and will require some users to invest more in material-handing equipment and cold-storage strategies.
