How Are Developers Preparing for Economic Trends in 2020?
Predictions of a downturn hitting next year are increasing, but are developers making any changes to strategy?
“CapRock Partners is optimistic about the growth opportunities in our target markets: California, Arizona and Nevada,” Jon Pharris, co-founder and president at CapRock Partners, tells GlobeSt.com. “The port markets of Los Angeles and Long Beach have always been a core focus of the company’s investment strategy, and we see their activity as primary drivers for overall U.S. economic growth—especially with the explosive emergence of e-commerce this decade,” he says.
The port effect and its economic benefits extend to Las Vegas and Phoenix, which made them logical areas for CapRock’s expansion beyond California this year, he adds. “As e-commerce becomes further immersed into our daily lives and we rely more heavily on same and next-day delivery, the demand for more new, modern and efficient warehouse facilities located in urban centers and along key transportation routes, will continue to grow.”
While the firm isn’t shaking up its core strategy, it is still closely watching economic trends, and won’t be surprised if there are some economic fluctuations. “There are several political and macroeconomic factors that could shift the direction of the overall economy in 2020,” says Pharris. “However, based on the demand we are seeing in the market for new warehouse space with record low vacancies and historically high lease rates, coupled with high land constraints and a short supply of modern class-A facilities, CapRock will continue to invest strategically with cautious optimism.”
The firm’s long-term hold strategy will also help protect it from any downturn to come. “CapRock brings an institutional approach to investing and developing, and we are committed to designing and building assets that create long-term value for the evolving needs of corporate America and the surrounding communities,” says Pharris. “We are evaluating significantly more deal opportunities today than in previous years to identify and secure investments that meet our strict underwriting criteria. Our team has always had room built into our underwriting to help protect us from fluctuations in the market.”