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Research
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Research
AMB publishes research on the market dynamics impacting our customers’ businesses, including global supply chain issues and developments in the logistics and real estate industries. Our dedicated research team works collaboratively with all company departments to help guide our market entry, expansion, acquisition and development strategies.
Research papers and articles are below.
The report analyzes the relationship between rent growth and market fundamentals. Specifically, it examines current U.S. industrial rents, which are down 20-30% from their 2008 peak and below levels that support new construction. The leading indicators of customer demand suggest that market fundamentals are improving and that rent levels will return to more normalized levels.
The AMB IBI is a diffusion index that integrates customer-provided insights with key macroeconomic variables to measure and forecast business activity and industrial real estate demand. The AMB IBI consists of an overall business activity and distribution space utilization index, tabulated for AMB's markets and industry groups. The AMB IBI indicates that economic recovery began in February 2009 and that business activity expanded in September and October 2009. It also implies that container volumes will continue to improve and that positive net industrial absorption is expected in 2010. The AMB IBI will be published again in February 2010.
Production, trade and inventories have fallen to unsustainably low levels and must rebound in order to meet even baseline demand for goods. There is evidence that indicates production and trade have turned the corner in many countries around the world. This new model illustrates how these key variables will likely impact the future demand for industrial real estate as we emerge from the global recession.
This report examines the impact of global trade on industrial real estate demand; the long-term relationship between trade and gross domestic product (GDP); insight into the evolution of trade; as well as the major trends that are expected to considerably influence the supply chain and warehousing needs of the future.
The Expert: Consumption & Retail Sales Trends
AMB's economist analyzes consumption and retail sales trends. Until the middle of 2008, consumption of goods and services rose substantially, fueled by lower savings, increased wealth and rising household debt. While neither personal consumption expenditures nor retail sales is the primary driver of industrial real estate, they are critical components of demand.
The Expert: Business Inventories Function as Economic Indicators
David Twist, AMB's economist, discusses lean inventory levels throughout the supply chain. This bodes well for the industrial real estate sector because there is likely to be a sharp rebound when the economy starts to recover, orders increase and companies will have to act fast to meet demand.
The Expert: Protectionism Hinders Global Trade, Economic Recovery
AMB's economist, David Twist, looks at the recent rise in protectionist measures in response to the current downturn and their concerning impact on global trade. Trade is one of the main engines for global economic growth, enabling talent, goods, capital and services to flow freely throughout the world.
The Expert: Will the Stimulus Package Increase Demand?
AMB's economist, David Twist, describes the possible impacts of the $787 billion stimulus package on demand for industrial real estate. Net employment increases would lead to positive net absorption. The spending side of the bill largely increases investment in infrastructure improvements that will create jobs. It is also expected to boost the flow of goods as a strengthened U.S. infrastructure makes trade-critical markets more competitive and attractive to global players.
The Expert: Global Trade Indicators
AMB's economist, David Twist, highlights global trade indicators. International Monetary Fund estimates foretell a difficult 2009, and long-term data suggest global trade will rebound strongly as global economic growth stabilizes.
The Expert: Have Los Angeles' Industrial Real Estate Fortunes Set Sail?
AMB's economist, David Twist, discusses the recent decline in container traffic at the southern California seaports. Factors include increased water service to the East Coast, labor negations, congestion uncertainty, regulation and fees.
The Expert: Bright Spots for 2009
AMB's economist highlights the bright spots in 2009 for the industrial real estate sector. Faced with a global economic recession, as well as evidence that it could deepen, the industrial property market is rife with uncertainty. Companies focused on market fundamentals, and that continue to execute on a strategy focused on the best locations, will be positioned to accelerate out of the downturn. As an asset class, industrial has traditionally demonstrated the least volatility and offered the highest risk-adjusted returns, resulting in a strong long-term commitment from institutional investors.
The AMB Industrial Absorption Indicator ("IAI") was first released to the public in July 2002, with our research paper titled, "Determinants of Industrial Real Estate Demand". It uses an index of net absorption and the manufacturing output component of the U.S. Federal Reserve Board's Index of Industrial Production ("IIP") as its primary inputs toward forecasting industrial real estate demand (net absorption) six months into the future.
Since 1989 (the earliest year to provide reliable industrial absorption activity), the IAI has posted an 88% year-over-year correlation between forecasted and actual space absorption. The AMB IAI is regularly updated each quarter, approximately two to three weeks after each quarter end.
RFID has been described as the supply chain advancement that will lead to all assets having perfect visibility through production, distribution, retail and consumption. Some have speculated that—as a result of RFID—the world will need about one-half the warehouse space it needs today. In this paper, we look at the impact RFID technology could have on the supply chain, the warehouse and the future demand for industrial real estate.
Industrial real estate has been one of the least studied property types (Rabianski and Black). Part of the reason may be that past studies have had difficulties in predicting demand. It has been suggested that some of the difficulties are likely due to the sector's noncyclical nature, the preponderance of owner-occupied structures, the diversity of subproperty types (manufacturing, warehouse and R&D) and varied users within these subproperty types. For office, multifamily and retail, the relationship between demand and employment and demographics are intuitive and statistically significant (Rabianski and Black, Shilton, Wheaton and Torto 1997, Mansour and Christensen). Traditional indicators of industrial demand have included manufacturing, warehouse and distribution employment, gross domestic product, population, inventories and freight flows.
