The downturn in several economic indicators that influence demand for industrial properties, such as retail sales and production, could eventually constrain demand for industrial space. Thus far, however, the sector has maintained good momentum with dwindling vacancy aided by low levels of new supply. Vacancy is forecast to tighten to 11 percent by year end.
Looking forward, pending legislation with bi-partisan support that allows states to tax online retailers would effectively eliminate ecommerce site’s 5 to 10 percent pricing advantage over brick-and-mortar retailers. Consumers would absorb higher prices, but the tax would contribute significant revenues to state coffers. To regain a competitive advantage, Amazon, and likely its online rivals, plans to offer same-day delivery, which requires more strategically located warehouses across the country.
Source: Marcus Millichap