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Economist: Current Crisis Differs from Dot-Com Bust

Markets that suffered in the previous downturn are now holding up – and vice versa.

By John McCloud | Updated on February 11, 2009

BOSTON-Though Q4 results show the industrial real estate market suffering its steepest decline since mid 2001, Torto Wheaton economist Luciana Suran maintains there are significant differences between the downturn that resulted from the dot-com implosion and the current one. In particular, she says, the difference in cause means that individual markets are being affected differently than they were eight years ago. Individual markets most heavily affected during the previous crisis are among those performing comparatively well today and markets that were spared severe losses then suffering now.

According to Torto Wheaton figures, based on statistics culled by the Boston-based firm’s parent company, CB Richard Ellis, industrial net absorption plunged in each of the past four quarters, with the national market shedding almost 48 million square feet in Q4 alone. As a result, the TWR Warehouse Rent Index declined for the first time since ’05, falling nearly 4% on an annualized basis from $6.09 a square foot to $6.03 a square foot. A market-by-market analysis shows that 40 of the 58 markets tracked experienced a decline in rents.

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