The Global Manufacturer

Expansion Now Means Rent Growth in the Future

If your company is bursting at the seams and you've accomplished about all you can do in terms of layout efficiency and reduced inventory storage, now might be a good time to think about securing additional space for your operations.

In his June forecast report, Kevin Thorpe, chief economist for Cassidy Turley, a commercial real estate services provider, says there are "strong indications that the U.S. economy has entered into the next cycle of expansion." Thorpe notes strong employment gains in April and surging corporate profits, as well as personal consumption growing at 3.6% in the first quarter of 2010.

Despite concerns about rising U.S. debt, Thorpe points out, global investors are still buying plenty of treasuries - $17 billion of 30-year government bonds as of May 5. This indicates, he says, that the vast majority of investors "remain confident that the U.S. is not heading down the same path as Greece."

As the industrial sector expands, Thorpe predicts that businesses will begin to absorb space consistently starting in the first quarter of 2011. He said vacancy rates will begin declining next year and rent growth will follow in 2012.

TAGS: The Economy
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