However, this recovery is quite dissimilar from the previous expansionary period. “The construction pipeline is not nearly as significant,” he says. In fact, on average, developers in the years 2002 to roughly 2008 delivered about twice the annual amount of industrial space than they have in the past three years.

Furthermore, Morris adds, “in the last few quarters we've seen a greater focus of capital on the top ten markets,” which could have long-term implications. In the previous decade, developers spread themselves out more, building in both core and secondary markets as the recovery gathered strength. But today, even though this recovery is several years old, the high-density core markets like Orange County still attract a lion's share of the activity. “I think that shows that developers have become more specialized and focused.”

This was a somewhat unexpected finding. Typically, these cycles follow a familiar pattern: developers concentrate on the safe, core markets at first, and then as cap rates in these cities fall, they seek out higher returns by building in secondary cities. And when that occurs, it's a sign that the business cycle is approaching a peak, the prelude to a possible downturn.

Therefore, “the fact that capital is still finding the returns it needs working in core cities is a good sign for the economy as a whole,” Morris says. This could extend the recovery since developers won't unleash a wave of new construction throughout a wider array of markets for some time.

“We thought we were in the 5th or 6th inning of this recovery,” he says. But with capital being more disciplined “it will extend this game beyond the 9th inning.”