In Baltimore, for example, even though jobs are at an all-time peak, the pace of growth has fallen behind national levels and unemployment is just above the national average at 4.4%. In addition, population growth is at its lowest level in at least 25 years. Ten-X writes:

While area industrial properties currently enjoy a vacancy rate of just over 10% — the market's lowest figure on record — weakening fundamentals are likely to have a large impact in the event of a cyclical downturn in 2019-2020. Current models indicate vacancies would exceed 12% by 2021, while slowing rent growth will flatten NOI to annual rate of just 0.9% over the same period.

As for Suburban Maryland's economy, it has rebounded over the last few months but that improvement does little to reverse much of the region's long-term decline. Employment in the region's wholesale trade sector has declined nearly 25% since 2007, which has significantly harmed the industrial arena. This area too also struggles with lagging population growth. According to Ten-X:

Industrial deliveries and demand were at cyclical highs in 2016 which should help reduce vacancies to 9.2% by 2018, according to Ten-X Research. However, under the recessionary scenario negative demand should increase vacancies by roughly 200 bps by 2020. NOI growth is expected to expand through 2018 before contracting and eventually flattening in 2021 as vacancies remain high.

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BALTIMORE–It is hard to find fault with the industrial markets these days — unless that is, you are in one of five areas singled out in Ten-X's US Industrial Market Outlook, which ranks five top cities to buy and five top cities to sell. Locally, Baltimore and Suburban Maryland are in the latter category. Other markets where investors are advised to sell their industrial properties are Dallas, San Antonio, and Columbus, Ohio.

Los Angeles, Nashville, Tenn., San Diego, Portland, Ore. and Sacramento, Calif. are the top markets in which investors should consider buying industrial assets, according to the report.

“More than any other class of commercial real estate, the industrial sector has reaped the benefits of an economy and culture that is becoming more and more dependent on modern technology,” said Ten-X Chief Economist Peter Muoio. “Despite a prolonged slump in oil prices, these secular trends are boosting the segment. While much of commercial real estate's future appears murky, the outlook for industrial remains strong.”

The problem with Baltimore et al is that while many have solid economies and currently healthy industrial sectors, large supply pipelines and other factors have left them exceptionally vulnerable in the event of an economic downturn, according to Ten-X.

In Baltimore, for example, even though jobs are at an all-time peak, the pace of growth has fallen behind national levels and unemployment is just above the national average at 4.4%. In addition, population growth is at its lowest level in at least 25 years. Ten-X writes:

While area industrial properties currently enjoy a vacancy rate of just over 10% — the market's lowest figure on record — weakening fundamentals are likely to have a large impact in the event of a cyclical downturn in 2019-2020. Current models indicate vacancies would exceed 12% by 2021, while slowing rent growth will flatten NOI to annual rate of just 0.9% over the same period.

As for Suburban Maryland's economy, it has rebounded over the last few months but that improvement does little to reverse much of the region's long-term decline. Employment in the region's wholesale trade sector has declined nearly 25% since 2007, which has significantly harmed the industrial arena. This area too also struggles with lagging population growth. According to Ten-X:

Industrial deliveries and demand were at cyclical highs in 2016 which should help reduce vacancies to 9.2% by 2018, according to Ten-X Research. However, under the recessionary scenario negative demand should increase vacancies by roughly 200 bps by 2020. NOI growth is expected to expand through 2018 before contracting and eventually flattening in 2021 as vacancies remain high.

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