How Can We Help You?

Forecasting & Analytics

Driven by economists and leveraged by market makers.
CRE performance across major metros and asset classes. History and forecast by CBRE.

Thought leaders abound

Depth, breadth and rigor concentrated at all levels.
Synthesizing macro factors and leading indicators into actionable national, sector and market research.

Advantage is CBRE

Perspectives, scale and connections that work.
Commercial and cultural insight aligned with intellectual capital and experience to fuel informed real estate decision-making.

Which data are right for you?

Data views and extracts by scenario and on demand.
Check out the fundamentals, capital markets, and data tools now on our one-pager.

Experience the platform

See first hand why top investors, developers and financial institutions are clients.
Set a time that works for you.

Introducing CBRE's new
Live, Work, Play Index.

TRY IT NOW

Econometric Advisors' blog

We expect industrial net absorption to drop from 190 MSF in 2017 to 75 MSF in 2019. Why?

Dec 1, 2017, 12:24 PM by Nikhil Mohan

How is it calculated?

The exogenous variable in our industrial forecast model is total employment growth. It drives availability, stock growth and rent growth in our forecasts. Total employment growth has held to a healthy range of 2.2%-2.5% over the past five years, but we expect it to slow to 0.88% in 2018 and then to -0.33% in 2019 as a mild recession occurs.

Per our model, this weak employment, coupled with rising availability and stock levels, produces the low absorption figure:

Net absorption is an indirect (calculated) output of our model, based on the availability and stock growth forecasts mentioned above. From our stock growth forecast, we calculate a stock level forecast. We use those stock levels and our availability rate forecast to calculate occupied stock:

 

(1-availability rate forecasts)*calculated stock levels = occupied stock

 

Net absorption is the change in that occupied stock.

So what about that employment forecast?

Recent jobs reports have provided mixed signals on wage growth; although there is certainly upward pressure on wages, aside from a strong September figure, wage growth has been sluggish. Whether it will gain—and sustain—any momentum remains an open question, particularly in the context of the softer consumption spending over the past three quarters.

Meanwhile, we expect credit conditions to become tighter, given the Fed’s plans to raise interest rates and to unwind its balance sheet. This would likely be a hindrance to new investment and consumer durables.

There is considerable softness in the auto industry: with a record number of cars coming off lease and a rise in auto loan rates, auto sales—a key economic barometer—are expected to decline 5% in 2017 and 5% in 2018.

We believe that a confluence of these factors, along with a continued general lack of political and fiscal clarity, will lead us to the 2019 recession, negative employment growth, and consequent low industrial absorption.

 

Ready to Get Started?

60 second demos.


WATCH NOW

Experience the platform.


TRY IT TODAY

Become a client.


NEXT STEPS

Global Research Tools

redirect pin user minus plus fax mobile-phone office-phone data envelope globe outlook retail close line-arrow-down solid-triangle-down facebook globe2 google hamburger line-arrow-left solid-triangle-left linkedin play-btn line-arrow-right solid-triangle-right search twitter line-arrow-up solid-triangle-up calendar globe-americas globe-apac globe-emea external-link music picture paper pictures play gallery download rss-feed vcard