“Dallas' economy is actually performing well, with the second highest rate of annual job growth among major markets as of September,” Matthew Schreck, Ten X quantitative strategist, tells GlobeSt.com.

“There is a massive wave of industrial supply in the pipeline though, totaling nearly 34 million square feet through 2021, per our forecasts. This will keep new completions ahead of solid demand through 2018, and particularly damages the vacancy and rent outlook during our 2019/2020 cyclical stress test scenario. We're expecting rents to end 2021 near their current mark, and we project vacancies to rise in the 14% range.”

In addition to Dallas, Ten-X also pinpointed Baltimore, San Antonio, Suburban Maryland and Columbus, OH as the five markets where investors should consider selling industrial properties. While many of these markets boast solid economies and currently healthy industrial sectors, large supply pipelines and other factors leave those metros exceptionally vulnerable in the event of an economic downturn, says Ten-X.

Nationally, Ten-X Research found that robust absorption has helped drive industrial vacancies down to just 7.6%, the lowest levels since 2000. With both supply and demand expected to soften through 2018 as the economic cycle matures, vacancies should bottom out in the mid-7% range. Rent growth has held steady in the mid- to upper 2% range in recent years, boosting rents across the sector to a historic peak.

While oil prices have rebounded in recent months, prices continue to hover around $50 a barrel, limiting the energy industry's contributions to growth in the industrial sector. This incremental rise has allowed for capacity utilization to trend upward through the course of the year. Industrial production has also had a spike to its highest levels since 2014, though the increase is not the primary driver of the sector's current success.

The report also noted trade flows have steadily improved this year, in part due to a resurgence in Asian intra-regional shipments and recovering import demand in North America. However, significant risks remain from protectionist policies, rising geopolitical tensions and a mounting toll from a series of natural disasters. While the Trump administration remains unsettled on a concrete tax plan, its decision not to pursue and pass a border adjustment tax is an encouraging sign for future trade growth.

“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 forecast indicates that Los Angeles, Nashville, San Diego, Portland, OR and Sacramento are the top markets in which investors should consider buying industrial assets. Notably, four out of the top five buy markets are in the western region with Southern California in particular benefiting from trade flows with China and Trans-Pacific commerce. However, the report cautions that the current political environment casts some uncertainty over the region's recent trade benefits.

DALLAS—E-commerce continues to drive demand for warehouse and distribution space. Moreover, the increase in cloud computing is also creating an unprecedented need for data centers.

Ten-X released its latest US industrial market outlook, including the top five buy and sell markets for industrial real estate assets. The report found that the sector continues to benefit from many of these technology-driven shifts.

On the sell list, Dallas' economy remains strong with annual employment growth of nearly 3%, low unemployment and population gains that have outpaced the US average for a quarter of a century. The city earns its place atop the sell list due to an overwhelming supply pipeline that promises to wreak havoc on the city's industrial market in the event of an economic downturn.

Under a cyclical downside scenario, the unprecedented industrial demand is forecasted to decline steeply in 2019, returning 60 million square feet of space to market and sending vacancies back to recessionary levels. Rents are also expected to decline through 2021, while NOI should grow through 2018 before facing contraction in the next three years.

“Dallas' economy is actually performing well, with the second highest rate of annual job growth among major markets as of September,” Matthew Schreck, Ten X quantitative strategist, tells GlobeSt.com.

“There is a massive wave of industrial supply in the pipeline though, totaling nearly 34 million square feet through 2021, per our forecasts. This will keep new completions ahead of solid demand through 2018, and particularly damages the vacancy and rent outlook during our 2019/2020 cyclical stress test scenario. We're expecting rents to end 2021 near their current mark, and we project vacancies to rise in the 14% range.”

In addition to Dallas, Ten-X also pinpointed Baltimore, San Antonio, Suburban Maryland and Columbus, OH as the five markets where investors should consider selling industrial properties. While many of these markets boast solid economies and currently healthy industrial sectors, large supply pipelines and other factors leave those metros exceptionally vulnerable in the event of an economic downturn, says Ten-X.

Nationally, Ten-X Research found that robust absorption has helped drive industrial vacancies down to just 7.6%, the lowest levels since 2000. With both supply and demand expected to soften through 2018 as the economic cycle matures, vacancies should bottom out in the mid-7% range. Rent growth has held steady in the mid- to upper 2% range in recent years, boosting rents across the sector to a historic peak.

While oil prices have rebounded in recent months, prices continue to hover around $50 a barrel, limiting the energy industry's contributions to growth in the industrial sector. This incremental rise has allowed for capacity utilization to trend upward through the course of the year. Industrial production has also had a spike to its highest levels since 2014, though the increase is not the primary driver of the sector's current success.

The report also noted trade flows have steadily improved this year, in part due to a resurgence in Asian intra-regional shipments and recovering import demand in North America. However, significant risks remain from protectionist policies, rising geopolitical tensions and a mounting toll from a series of natural disasters. While the Trump administration remains unsettled on a concrete tax plan, its decision not to pursue and pass a border adjustment tax is an encouraging sign for future trade growth.

“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 forecast indicates that Los Angeles, Nashville, San Diego, Portland, OR and Sacramento are the top markets in which investors should consider buying industrial assets. Notably, four out of the top five buy markets are in the western region with Southern California in particular benefiting from trade flows with China and Trans-Pacific commerce. However, the report cautions that the current political environment casts some uncertainty over the region's recent trade benefits.