Last week, I said that watching the commercial real estate market is critical for timing the next recession.
Why? Well, U.S. banks hold about $2.7 trillion in commercial real estate loans.
If they underperform, they could trigger a much larger crisis than the Silicon Valley Bank saga.
Fed Chair Jerome Powell said that he’s “aware” of the concentration of commercial real estate loans in U.S. banks.
This is an important indicator… but the latest data suggests that there’s no commercial real estate crisis coming.
…Which confirms my 18.6-year real estate cycle.
Industrial Sector Posts Strong Growth Amid Recession Fears
The latest report from CommercialEdge, a market intelligence provider, paints a positive picture.
Demand for industrial space in the United States is outpacing supply.
And it’s important that this fundamental picture holds consistently across the country. This tells me that the outlook for industrial real estate is consistently strong.
As a result, the average rent for in-place leases grew 6.9% compared to last year nationwide.
New lease premiums are the highest in port markets.
I predicted this trend back in January. I wrote:
[Y]ou need warehouses.
And not just any warehouse will do…
The ones located close to marine ports are some of the most prized assets.
Every mile saved on transporting containers from a port to a warehouse saves money.
Transportation, after all, amounts to 45% to 70% of total logistics costs.
As a result, there’s a frenzy in the warehouse market. Everybody wants access to the warehouses located near ports.
This wave of demand tells me that global trade is booming. It’s flourishing.
This Is What the Mainstream Media Is Missing
This is what the mainstream media is missing. It’s a massive multibillion-dollar trend that barely gets mentioned in the press.
Trade is booming. Port space is becoming more and more scarce. Warehouse rents are going up…
Rent growth in port areas and those adjacent to ports was staggering.
Rents were up 15.6% in the Inland Empire region of Southern California, 11.6% in Los Angeles, and 10.7% in Boston… The list goes on, and the pattern is clear.
Trade is doing well.
The economy at large is doing well, too. The industrial vacancy rate is just 3.9%, down 10 basis points over the previous month.
And vacancy rates are going down, despite the fact that over 1 billion square feet of new stock has been added over the last two-and-a-half years.
Over the next several years, the total industrial footprint could increase by a further 9%.
There’s no slowdown and no imminent recession.
That’s what the real estate cycle tells me.There’s never been a crash at this point in the cycle for over 200 years.
And fundamental data continues to prove the cycle is right.
Regards,
Phil Anderson
Editor, Cycles Trading with Phil Anderson
P.S. In fact, I’m so confident that there’s no imminent crash coming, I’m holding a special event called The Eleventh Hour tomorrow, April 11 at 10 a.m. ET.
During this briefing, I’ll talk about how you can learn to “see” the reliable cycles and patterns the market has followed for hundreds of years…
How, if you know what to do, you can create generational wealth.
And if you don’t… kiss your nest egg goodbye.
I’ll give you all the details tomorrow. Make sure to secure your spot right here. You’ll be automatically added to the guest list.
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