A new report from the REIS teamat Moody's Analytics says to expect a delay before any slowdown inthe industrial real estate market surfaces in the wake of theCOVID-19 pandemic since leases are locked in and the economicslowdown's impact on trade has thus far been ambiguous.

"But to be sure, the shutdown inthe economy will still hurt the industrial sector, and significantnew construction that had been underway will only compound theproblem," wrote Barbara Byrne Denham, a senior economist in theresearch and economics department at REIS. The report, subtitled"Calm before the Storm," forecasts the completion of 111 millionnew square feet of industrial space coming online in 2020 despiteconstruction delays caused by the coronavirus. That number is downfrom 148 million square feet of new industrial space completed in2019, but could still contributed to a decrease in net absorptionand lowered rental rates. 

Under the "protracted slumpscenario"—a worst-case projectionforecasting GDP contraction in the second quarterof more than 30% year-over-year—the report forecasts negative netabsorption of 200 million square feet in the warehouse anddistribution sector in 2020 and another 70 million square feet ofnegative net absorption in 2021. Under this scenario, vacancy wouldrise to 12.8% at the end of 2021 and average asking rents andeffective rents would drop 3.5% and 6.0%, respectively.