"Industrial markets don't have as quick a downturn as other areas and also rebound more quickly because they can halt the delivery cycle faster than, say, office builds," Fraker tells GlobeSt.com. "Once you start an office building, you've committed to finishing it."
Strong consumer spending through out the downturn will also hasten the market's return. "Industrial recovery is tied directly consumer products and retail sales," says Fraker. "It is a directly proportional relationship." He predicts a more rapid industrial recovery to occur in the heavy defense and tech-space regions of Long Island and Northern Virginia. A quick response will also be felt in the bulk-distribution areas of Los Angeles, Dallas, Chicago, Atlanta and Northern New Jersey.
The greatest industrial lag will be felt in the tech-laden West Coast region. In addition, Fraker predicts that the office sector will be the next to recover.
Fraker's input complements a recently released Cushman & Wakefield report, which predicts office construction will slow noticeably in 2002. "In the fourth quarter of 2001, we started to see a slowdown in speculative construction as well as build-to-suit activity," says Pamela Zoellner, senior managing director, industrial services for C&W. "This trend will continue in 2002."
Approximately 84.5 million sf is scheduled for delivery this year. According to the report, the majority of new construction is concentrated in California, Chicago, Central and Northern New Jersey, Atlanta, Dallas, Detroit, Ft. Lauderdale and Louisville.
Among the 31 markets addressed, the survey indicates those experiencing the greatest increase in warehouse/distribution asking rents from Q4 2000 to Q4 2001 include Orange County, CA, Philadelphia, Denver, Northern N.J and Los Angeles. Markets experiencing the most significant declines over the same period were tech-heavy sectors including San Francisco, San Jose and Los Angeles North.
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