Like its neighbor Dallas, Fort Worth is also struggling to keep up with supply additions while its economy is waning amid low oil prices. Most of the losses seem to be contained in the construction, mining and manufacturing sectors–a familiar trend in the region. But while vacancies have dropped to the mid-9% range, Ten-X Research predicts NOI growth will be stunted by the lack of absorption and mediocre rent growth, averaging an estimated 1.6% per annum through 2018.

“The previous wave of industrial supply, which hit the market over the past year, commenced construction in 2014, when oil prices were high and Dallas' economic outlook was rosy,” Chris Muoio, senior quantitative strategist at Ten-X tells GlobeSt.com. “But while oil prices have dipped, industrial construction has continued its rapid pace, and the city's healthy industrial demand will be unable to keep up with the massive amount of supply that continues to come online. Over the next two years, vacancies will remain in the high-11% range, but we see them climbing to nearly 15% by 2020 due to the introduction of cyclicality in our forecast models.”

Overall deal volume for industrial assets fell to $12.5 billion during the second quarter according to Real Capital Analytics, a 26% decline from the same period in 2015. But vacancies have fallen into the mid-8% range, and rents have seen an uptick of about 2% year-over-year.

“The industrial sector is benefiting from the same shifts that are afflicting its retail counterpart. As more and more people choose to stay home to do their shopping, companies need more space to house and distribute the products they sell online,” said Ten-X chief economist Peter Muoio. “While other economic factors are hurting energy-dependent and port-exposed markets, this change in consumer behavior appears built to last, and puts industrial owners in a favorable position for the years to come.”

A majority of indicators show the sector should continue to blossom, as Ten-X Research predicts rents should increase by approximately 3% during the next two years. Vacancies, meanwhile, are likely to fall as low as the mid-7% range in 2018, which would be the lowest since 1990.

Investors should remain cautious, however, as the sector will remain vulnerable to a cyclical downturn on the horizon. Research shows vacancies are poised to rise to around 9% by 2020, while rents are projected to see a decline of about 1% per year beginning in 2019, says Ten-X.

DALLAS—The long-term industrial forecast reveals the sector continues to enjoy healthy expansion, thanks to the continued rise of distribution centers tied to the growth of e-commerce and the increasing use of warehouses as cloud computing facilities, according to Ten-X. The firm recently released its latest US Industrial Market Outlook, including the top five buy and sell markets for industrial real estate assets.

Ten-X Research's data suggests that Nashville, Los Angeles, Memphis, Atlanta and San Bernardino-Riverside, CA are markets in which investors should consider buying industrial assets. While overall economic conditions in these areas differ, each is in a unique position to capitalize on the mounting demand in the sector, citing strong absorption rates that promise to outpace supply during the next two years.

Other markets that rely heavily on energy industries are struggling amid the lasting slump in oil prices, which have contributed to an economic malaise affecting nearly all real estate sectors. Four Texas cities–Houston, Dallas, Fort Worth and San Antonio–are among the metro areas where industrial investors might consider selling properties, according to Ten-X. Suburban Maryland, a region in which the economy has proven sluggish due mostly to low population growth and a floundering professional and business services industry, also made the sell list.

Although Dallas' economic diversity sustains strong metro-area employment, measuring in the high-3% range, its industrial market is struggling with a heavy supply pipeline with limited prospects for absorption. Ten-X Research predicts that vacancies will remain level through 2018 in the high-11% range, along with a flattened effective rent growth. Additionally, the sector's market NOI growth is expected to be constrained to 1.1% per year through 2020.

Like its neighbor Dallas, Fort Worth is also struggling to keep up with supply additions while its economy is waning amid low oil prices. Most of the losses seem to be contained in the construction, mining and manufacturing sectors–a familiar trend in the region. But while vacancies have dropped to the mid-9% range, Ten-X Research predicts NOI growth will be stunted by the lack of absorption and mediocre rent growth, averaging an estimated 1.6% per annum through 2018.

“The previous wave of industrial supply, which hit the market over the past year, commenced construction in 2014, when oil prices were high and Dallas' economic outlook was rosy,” Chris Muoio, senior quantitative strategist at Ten-X tells GlobeSt.com. “But while oil prices have dipped, industrial construction has continued its rapid pace, and the city's healthy industrial demand will be unable to keep up with the massive amount of supply that continues to come online. Over the next two years, vacancies will remain in the high-11% range, but we see them climbing to nearly 15% by 2020 due to the introduction of cyclicality in our forecast models.”

Overall deal volume for industrial assets fell to $12.5 billion during the second quarter according to Real Capital Analytics, a 26% decline from the same period in 2015. But vacancies have fallen into the mid-8% range, and rents have seen an uptick of about 2% year-over-year.

“The industrial sector is benefiting from the same shifts that are afflicting its retail counterpart. As more and more people choose to stay home to do their shopping, companies need more space to house and distribute the products they sell online,” said Ten-X chief economist Peter Muoio. “While other economic factors are hurting energy-dependent and port-exposed markets, this change in consumer behavior appears built to last, and puts industrial owners in a favorable position for the years to come.”

A majority of indicators show the sector should continue to blossom, as Ten-X Research predicts rents should increase by approximately 3% during the next two years. Vacancies, meanwhile, are likely to fall as low as the mid-7% range in 2018, which would be the lowest since 1990.

Investors should remain cautious, however, as the sector will remain vulnerable to a cyclical downturn on the horizon. Research shows vacancies are poised to rise to around 9% by 2020, while rents are projected to see a decline of about 1% per year beginning in 2019, says Ten-X.