How Does This Industrial Slowdown Compare to 2009?

Holland says current manufacturing availability is 148% greater than that of Q1 2009.

HOUSTON—How does the current slowdown in Houston’s industrial market compare to that of the 2009 Great Recession? To answer that, it is necessary to look at changes in availability and leasing activity between these two downturns, including differences among flex, manufacturing and warehouse/distribution buildings. By indexing the data to the first quarter of 2009, at which West Texas Intermediate (WTI) had the lowest average monthly price during the Great Recession, rates of growth (or decline) in availability and leasing activity can be compared, particularly given the different magnitudes of values of these variables among flex, manufacturing, and warehouse/distribution buildings, according to a report by NAI Partners.

The bottom in WTI prices is similar between 2009 and the current downturn, says the report. That is a 70 to 75% drop from peak to trough. Availability is currently 9.1% for all industrial products combined, which is about 1% less than the peak following the 2009 recession. It took about three to four quarters following the WTI bottom in first quarter 2009 for availability to increase and stabilize at 10%. It is not likely that availability will stabilize for another two to three quarters given WTI’s bottom was likely in first quarter 2016, says NAI.