Supply chain managers may see decline in warehouse vacancies
The article “Supply chain managers may see decline in warehouse vacancies” talks about the decline of vacancies in warehouses across the country, highlighting that this trend is a sign of revival of the U.S. economy after a few years of post-2008 recession. The momentum is strong both in leasing and absorption, as well as in the level of construction, indicating that warehouses may no longer remain vacant, as it was the case during the previous years.
The news about higher activity in the commercial real estate market seems to be a sign of the overall economic recovery. The demand for warehousing space comes both from ecommerce companies and from traditional brick-and-mortar retailers, which try to meet the growing consumer demand. In the past few months, American consumers feel more confident about their future, therefore they continue to increase their purchases. That is why industrial companies require more and more space to store the stock of items demanded by their customers.
The commercial real estate industry responded to this rise of demand for warehousing space by increasing prices and initiating new construction projects. The construction activity is particularly strong in ports and intermodal hubs, demonstrating that the market expects also an increase in trade. However, this trend should be assessed with caution, as overoptimistic expectations of the real estate market can harm rather than foster further development. Higher warehousing prices may become an obstacle for companies, which still have problems to recover from the crisis and to achieve stable level of profits. Furthermore, if current expectations exaggerate the level of economic growth that the country can achieve, the large number of construction projects will lead to overcapacity and consequently to low profitability in the industry.
The post-2008 economic recession was a great challenge for nearly all companies in the U.S. and worldwide. However, the latest numbers of the warehousing vacancy show that the economy starts to recover and industrial companies need more space to store products demanded by their clients. Although it is important to bear in mind that the current trend is fragile and may not last long, the short-term outlook for the economy is positive.
References
Burnson, Patrick. "Supply chain managers may see decline in warehouse vacancies." Peerless Media Network. 21 Nov 2013: n. page. Web. 3 Dec. 2013. <http://www.logisticsmgmt.com/article/supply_chain_managers_may_see_decline_in_ware house_vacancies/news>.
