The official definition of a recession says that the economy is in a recession if the country’s gross domestic product declines for two consecutive quarters.
Under this definition, the United States entered an economic recession during the summer of 2022.
However, some experts argue that low unemployment, record corporate earnings, and GDP growth in Q3 indicate that the U.S. is not yet in a recession.
Unfortunately, whether we’re in a recession right now may be a moot point, as many economists agree that a recession is coming soon.
As other commercial real estate sectors (CRE) batten down the hatches to prepare for an economic downturn, the U.S. commercial real estate market continues to experience an industrial real estate boom.
Though rising industrial demand began more than a decade ago as the country came out of the last recession - known popularly as The Great Recession - most of the industry’s recent successes can be attributed to the e-commerce boom resulting from the COVID-19 pandemic.
With industrial real estate still going strong despite other signs of economic volatility, logistics property owners and investors find themselves wondering if investing in warehouses will help them successfully weather the coming storm.
Will the inertia of the current warehouse and manufacturing boom carry the industrial boom through the recession?
It’s difficult to predict the exact impact of a recession without knowing how deep the recession itself will go. With that said, we can reasonably make some predictions about the impact of an economic downturn on warehouses and factories:
Given the current strength of the industrial market, it seems all but certain that the industry will ride out the coming recession as a top CRE class, just as it did during the pandemic. Also, a word of advice: Supply chain stakeholders should keep an eye out down the road. They may find some lucky deals when financial institutions and investors begin to sell off the various warehouses they acquired to ride out the economic slump.
Strategic Real Estate. Applied Technology. Tailored Service. Creativity. Flexibility. These fundamentals reflect everything we do at Phoenix Logistics. We provide specialized support in locating and attaining the correct logistics solutions for every client we serve. Most logistic competitors work to win 3PL contracts, and then attempt to secure the real estate to support it. As an affiliate of giant industrial real estate firm Phoenix Investors, founded by Frank P. Crivello, we can quickly secure real estate solutions across its portfolio or leverage its market and financial strength to quickly source and acquire real estate to meet our client’s needs.
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