Looking Forward to 2023

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The looming repercussions of the lockdowns forced the hands of lawmakers to subsidize its’ citizens to stay home and lower interest rates to stimulate the economy. This was an unprecedented global phenomenon. The after-effects of this would create massive inflation, and increased demand for goods, especially automobiles and luxury items as well as construction. This unparalleled demand created an enormous strain on the supply chain both on the production/manufacturing end as well as the warehouse logistics end.

Inflation and Its Effect on the Market

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During the early stages of the Covid pandemic, supply chain disruptions due to plant shutdowns and widespread employee shortages resulted in price increases as demand rapidly outweighed supply.  Consumers have remained burdened with high prices on most goods, and prognosticators are predicting that costs will remain high or continue to increase moderately for the foreseeable future.

Logistics, Land, and Industrial Real Estate

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Industrial real estate, and more importantly, logistics real estate, serves as the conduit everyday consumers have become accustomed to receiving goods and services. Warehouses provide for product storage, truck terminals and distribution centers bring the product one step closer to the consumer while storage yards for trucks, trailers, and containers allow for the aggregation of equipment necessary to match the product to the consumer. The consumer, however, is the catalyst that dictates how each of these components thrives or declines, and ultimately interacts.

Logistics Market Leading the Pack

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Despite the ongoing covid-19 pandemic, the logistics industry has performed remarkably well and facilitated the economy to stay afloat.  As online sales continue to rise, it will also continue to drive the New Jersey metropolitan industrial market, it’s rental rates, footprint, etc. This will continue through 2021 and beyond.

Trade Tensions Cause and Effect

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American importers pay a significant portion of the increase and US consumers pay the remainder due to the increase on goods manufactured in China. However, China’s economy is slowing, with consumers holding back and infrastructure spending slowing sharply. This slowdown is expected to worsen as America’s tariffs ramp up. On the other hand, the United States has continued to experience vigorous economic growth, including the lowest unemployment rate since 2000.

The online e-commerce shopping boom sure has put a dent in retail and commercial real estate space as a whole, but is the damage getting worse or can industrial real estate bounce back and remain solid? The next downturn in CRE will be catalyzed initially by a stagnant economy and low growth, followed by multiple years of mild-to-escalating recession, credit re-rating, and demand for higher risk premiums by capital providers. Income growth will slow or go negative in the medium term, cap-rate compression will cease, and finding new tenants will be very difficult. With this happening, we will also witness aging demographics and subtle changes of consumption baskets and lifestyle, that revolutionize the format of office and retail.

New Supply Chain Disruptors Affecting Retail

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It seems these days, there are growing numbers of supply chain disruptors. From erratic thunderstorms to tornadoes, hurricanes and droughts; natural disasters still pose the greatest threat to retail disruption. As these uncontrollable events happen, we feel the effects throughout the economy which directly translates to retail.

The Cost of Tariffs

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On May 10, 2019, talks with China ended abruptly; we saw the market tumble more than 600 points. This past Friday, President Trump responded by adding a 25% tariff on $200 billion of Chinese goods, substantially increasing the tariffs from their prior 10%.

Where Do We Go From Here?

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The NJ industrial real estate market has now been in a bull market since 2013. Prices have seen levels that were thought to be untouchable, as short as five years ago. Inventories are still relatively low and the question on everyone’s mind is, “Where do we go from here?”

Tri-State Economic Development

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By Charles T. Kavanagh

n the course of servicing our clients, we experience that at some time a few may consider relocating to other states. More often than not, the driver of the consideration …

Cycles Will Always Prevail

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By Michael F. Schipper

“I think it’s essential to remember that just about everything is cyclical. There’s little I’m certain of, but these things are true: Cycles always prevail eventually. Nothing goes in one …

The Effect of the Election on Real Estate

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By Alessandro (Alex) Conte, CCIM, SIOR

Donald J. Trump, 45th President of The United States of America, will most likely bring some much needed stimulus to the economy in his first year. His policies point to a combination of tax cuts and government spending in the form of upgrading the nation’s infrastructure and for national defense, which will provide a short term boost to the economy in the first half of 2017.