Tina Lichens
Los Angeles and Long Beach are among the markets to see the biggest impact from the trade disputes and tariffs. Port markets and the supportive industrial real estate sector are most exposed to the effects of the trade disputes, and Los Angeles and Long Beach are the largest ports in the country. The Port of Long Beach is already seeing an impact from the tariffs, with decreasing cargo volumes, according to its latest report. The good news: the impact has been minimal so far this year.
"Certainly port markets, such as Los Angeles and Long Beach, are going to see any disruption from tariffs first-hand, but the overall flow of goods has been strong this year," Tina Lichens, COO of Real Capital Markets, tells GlobeSt.com.
Investors and retailers have been staying ahead of the tariffs, and as a result, have helped to offset a major dip in activity. Retailers, for example, order goods earlier once tariffs were announced. "Many businesses stockpiled goods ahead of tariffs going into effect, so there might be an ebb and flow change, but not a long-term negative change," Lichens says. "While businesses and the consumer are paying more, that often becomes another cost that is added into the investment analysis. There is a lot of noise about the tariffs, but investors and brokers are saying it does not define the industrial sector and it certainly isn't slowing things down."
Likewise, investors are maintaining a diversity of tenants in industrial properties to mitigate any loss during a trade dispute. "The nice thing about the investment market today is that while e-commerce is certainly a driving force, other sectors are contributing to a strong market,' says Lichens. "As Mark Duclos the incoming President of SIOR noted, while we live in a global world, real estate continues to be a locally-specific market, with geographic specialties and nuances driving activity there. This means that markets across the country are perhaps more shielded by diversification and also benefitting from the great discipline we've seen in this cycle that generally has produced few significantly overbuilt markets."
Investors are already developing acquisition strategies with these risks in mind, but most continue to be bullish on industrial investment through 2020. "Investors today are very sophisticated and already are doing their due diligence, carefully evaluating the myriad factors that influence the decision on how to invest and where to allocate resources," says Lichens. "They must stay true to their acquisition philosophy and the criteria that would mitigate any type of investment risk, whether it stems from trade disputes or other issues that could impact return on investment."
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Kelsi Maree Borland
