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Mixed Signs of Recovery in Jones Lang LaSalle's Industrial Outlook

The industrial real estate market is showing signs of recovery, but labor markets continue to lag, according to Jones Lang LaSalle's first quarter North American Industrial Outlook report. The Canadian industrial real estate market has already begun to gain, but demand for industrial space in Mexico has not yet grown.

"In the U.S., companies are slowly gaining confidence in the pace of the recovery. While occupancy costs continue to fall, tenants are seeking to take advantage of what could be all-time lows," said Craig Meyer, managing director and head of Jones Lang LaSalle's Americas Industrial Services team. "However, while industrial activity levels are improving, they are not yet translating into positive absorption."

In the United States, the national vacancy rate was 10.6 percent during the first quarter. While that marked a continued decline of the industrial property market, there were signs that recovery was on the horizon.

"The year began with some positive signs, namely the flattening of sublease availabilities and a narrowing decline in asking rents," Meyer said.

Denver, Houston, Los Angeles, northern New Jersey, San Diego, and Seattle had the lowest industrial vacancy rates. Atlanta; Central Valley, California; Charlotte; Detroit; and Phoenix had the highest.

For Canada, economists were optimistic in modest recovery for the real estate market in 2010. But the manufacturing and resource sectors will continue to suffer because of weaker trade. Mexico's border regions are still afflicted by economic problems, as well as crime and heightened military presence. Political reasons and drug crime impede the country's progress, but the Bajio and Central regions, Mexico City, and Monterrey are beginning to see more industrial tenant activity.

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