It has been 25 years since I sat at that table. I was maybe one hour post high school graduation, and from where I was sitting, I could see the whole world in front of me. The words my father told me still stick in my mind like it was last night: “Hold on and get ready. Life is about to fly by.”
It seemed like an eternity getting to high school graduation. I was about to embark on my time in college. It couldn’t really fly by that fast, could it?
Several years later, in the midst of my first year in the brokerage business, came more advice from my father: “When business is good, you’ll never think it can get bad. And when business is bad, you’ll never think it can get good.” (Who coined that phrase, “Father knows best?” Pretty smart indeed, Pops. Mom, too, of course.)
It seems like time has flown by since our last “bad” market. We are now six years into what has snowballed into a record industrial market. Vacancy still tugs toward record lows at 6.5 percent, and rates are touching all-time highs. With 24.3 million square feet currently under construction and 28.7 percent being pre-leased or build-to-suits, we are looking at what lies ahead for this year.
Currently we are tracking 22.6 million square feet of active industrial tenants in the market. With the first quarter absorption levels coming in at 3.9 million square feet, we are forecasting for a year end figure of about 16 million square feet of overall absorption.
Rates are rising this year at a 3.5 percent clip, and it appears to again be a strong, balanced market. Forecasted long-term vacancy looks to trickle up to close to 8 percent over the next 24 months, still very much in line with our historic norms.
Even with all of the positive news and outlooks, there’s still that slight urge to peek over our shoulder to what could possibly loom. Time does seem to fly by, but in the near term, I for one am staying on the positive side of my old man’s words of wisdom.
Craig Jones is a managing director at JLL. Contact him at [email protected]