Think back. Think waaaaay back to a time before the internet and cell phones to a time when you sat in class, bored as your Economics 101 professor explained the impact of strong and weak dollars. You might remember that strong dollars make our goods expensive relative to goods in other countries. A weak dollar has the opposite effect.
When goods in our country are expensive relative to goods in other countries, demand for warehouse and logistics space declines, driving prices downward. When goods in our country are inexpensive, demand for space increases, driving prices upwards.
The current market for industrial space is strong. Very strong. This is likely the result of increased demand for goods, driven by e-commerce. Thanks Millennials. But the strength of the U.S. Dollar poses a threat. I recently appraised a large industrial building in Tennessee in close proximity to another building that had recently been vacated after demand for their product had waned as a result of the strengthening U.S. Dollar.
Currently, e-commerce appears to be winning the battle as we see strong demand for industrial space in many of the markets that we provide appraisal services. But the strength of the dollar – that’s a situation worth watching. Here’s a link to the St. Louis Federal Reserve chart to help you keep track.