The Global Financial Crisis and Real Estate (part 5)

The Global Financial Crisis and Real Estate (part 5)
The worldwide outlook for industrial properties will be mixed. While there is some slow down in employment and demand for manufactured goods will inevitably decrease. This is a slower situation. Companies that stay in business can cut production easily enough by laying off workers. It is more difficult to reduce or eliminate facilities. By the time these reductions are accomplished the demand should have rebounded. Demand for large new facilities will probably decline somewhat.
The property sector that usually benefits from a turndown in the general economy is the smaller industrial and warehouse properties. Middle managers get laid off. They either look for another position, retire or start their own business. This third alternative should make demand for small buildings increase. The big question in this particular turnaround is the loss in asset value in the financial markets. These middle managers typically fund their new ventures from their retirement account or stock portfolios. They may not care to liquidate these funds under the present economic conditions.
In emerging markets there is still some fairly strong demand from internal consumers. Perhaps this will last until the general market improves and leave these markets relatively untouched. Even where they do have some slowdowns they may actually be helpful. In China’s case, for example, the economic growth is expected to slow from 11% to 9%. This could allow their infrastructure to catch up with their other growth.

Next we will examine the office sector
David Segrest is a REALTOR in Charlotte NC. His website is http://www.segrestrealty.com His email is david@segrestrealty.com