Get Ready for Industrial Demand to Slow in 2020

David Shulman is a senior economist at the UCLA Anderson Forecast.

Industrial continues to be the top performing real estate asset class, but next year, industrial leasing activity and user demand could slow. According to the latest letter from UCLA Anderson Forecast and UCLA Ziman Center for Real Estate, slowing economic activity and pressure from trade tensions will start to impact the market next year. The shift in market dynamics will affect speculative development specifically.

“Trade controversies will start to show up in industrial next year, not this year,” David Shulman, senior economist for the Ziman Center and UCLA Anderson Forecast, tells GlobeSt.com. “So, I believe that pure spec industrial next year will face a far more difficult environment. Obviously, deals that are pre-leased will be fine, but for purely executive projects, it will be a more difficult environment. It won’t be horrible, but it will not be as good as some of the proformas are now penciling out in terms of lease-up periods and rent.”