HERNDON, Va., April 22, 2009 – The NAIOP Research Foundation released a report, sponsored by the Foundation and prepared by Cushman & Wakefield, that examines how changes in the global trading environment have affected the industrial real estate market.

The report, New Age of Trade: The Americas, explores both the macro- and microeconomic factors that influence production, trade and supply chain management, as well as the major trends that are expected to considerably influence the supply chain and warehousing needs of the future.

The report also takes into consideration recent economic factors, including increased fuel costs, the recession and an overall global financial downturn, that have slowed demand and growth rates to the lowest since 2002.

"Obviously today's economy will alter business and supply chain management in the coming years," said Thomas J. Bisacquino, NAIOP president. "However, given advancing technology, modern transportation and growing consumer demand in emerging economies, the new age of trade is here to stay."

The entire report is available for complimentary download on the NAIOP Research Foundation Web site. Among the noteworthy findings are the following:

Global Trading
Since the 1994 signing of the North America Free Trade Agreement (NAFTA), the United States has increased trade with Mexico and Canada by $314 billion, or nearly 12 percent per year - accounting for 38 percent of all U.S. import and export trade.

NAFTA, in addition to China's emergence as an immense producer of goods at low cost, the end of the Cold War and the emergence of the Internet and other technologies, triggered a new age of trade. Between 1994-2007, the volume of U.S. goods imported and exported increased by more than $1.5 trillion, or about $120 million per year.

Trade growth with Asia has resulted in a vast flow of goods through ports in the western United States. In 1997, China became the largest exporter of goods to the United States, surpassing Canada for the first time in history. Within the Amercias, trade in 2007 was 74.5 million TEUs (twenty-foot equivalent units), a 116 percent increase from 1997.

The economic downturn in 2008 has influenced global supply. After a decade of growth, ocean trade growth is expected to stay flat in 2009, and consumer spending - a major driver of the world economy - is expected to remain restrained. Although demand has slowed, trade patterns for industrial market development will continue to evolve to support current and anticipated future demand.

The Impact on Real Estate
Increased global trade has been instrumental in reshaping trade and strengthening economic activity, with subsequent impact on the U.S. industrial real estate market. New industrial opportunity will result from increased investments in rail and port infrastructure, the widening of the Panama Canal and the need to situate goods in order to reduce transportation costs.

Mexico stands to benefit the most from a high-cost transportation environment that forces companies to reassess the location of their production facilities. Mexico offers low-wage labor and direct access to markets in the United States. Specifically, border markets of Juarez and Monterrey could have the greatest benefit, followed by Tijuana, Guadalajara and Reynosa.

Within North America, the strong manufacturing base in the industrial Midwest could benefit, and areas in the Southeastern United States could benefit from lower union membership rates and continue to attract manufacturing and automobile production. Mixing modes of rail, sea and trucking to maximize transportation savings is growing in popularity, likely to benefit the largest ports and inland hubs with the best rail access. Southern California and Seattle/Tacoma could see an increase in loads moving toward traditional inland hubs of Chicago, Atlanta and Dallas via rail. Increased sea-oriented approaches would bring goods through the Panama and Suez canals, straight to major East coast ports of New York/New Jersey, Savannah and Hampton Roads, Va.

A mode mix also affects the need for mega-distribution centers and increases the demand for smaller facilities. The idea is that smaller, or less-than-truckload (LTT), loads going from mega-distribution centers are less efficient than full trucks delivering goods to small centers located closer to consumers. This will benefit smaller regional distribution centers, including Denver, Charlotte, Portland and Kansas City.

Alternative Port Demand
Ports, waterways, rail and trucks - the backbone of the logistics chain - are going through major growing pains to keep pace with global demand. Surging international ocean trade has made Mexico's ports increasingly attractive to global shippers, especially for cargo originating from Asian countries. Mexican ports offer a labor cost advantage, with wages less than one-quarter of those in the United States - and less congestion than California ports.

Container traffic at Mexico's busiest port in Manzanillo surged 13 percent in 2007, and Puerto Lazaro Cardenas' container tonnage volume grew by 68 percent. This port has a key asset - its on-dock rail facilities are provided by a subsidiary of American railroad Kansas City Southern, providing direct links to the southern United States.

Canada's Prince Rupert facility, located 540 miles north of Vancouver, is the first North American port designed exclusively for intermodal rail shipments. Its impact will be felt greatest on the Canadian National Railway's network in Chicago, Memphis and Toronto.

Inland hubs will result from increased rail use and intermodal investments. Chicago's dominance will remain unchallenged, with additional markets making significant public and private investments in roads, rail and intermodal terminals. Dallas is well-positioned, as is Atlanta, Kansas City, Memphis and San Antonio. Additional logistic opportunities will arise in Caribbean transshipment hubs and resulting from an expanded Panama Canal.

Findings Presented
Findings from New Age of Trade: The Americas will be presented as part of a panel at NAIOP's upcoming I.con-the Industrial Conference, June 23-24, in Long Beach, Calif. The panel will delve into current transportation and infrastructure (water, rail and roads) issues that impact industrial real estate, including capacity constraints at Los Angeles/Long Beach, inland ports, future port development and how fuel prices will change the trucking industry.

Panelists for the session include Jon DeCesare, chief executive officer, World Class Logistics Consulting; Maria Sicola, executive managing director, Cushman & Wakefield; and Neil Doyle, executive vice president, Infrastructure & Transportation, CenterPoint Properties.

About the NAIOP Research Foundation

The NAIOP Research Foundation was established in 2000 as a 501(c)(3) organization to support the work of individuals and organizations engaged in real estate development, investment and operations. The Foundation's core purpose is to provide these individuals and organizations with the highest level of research information on how real properties, especially office, industrial and mixed-use properties, impact and benefit communities throughout North America. For more information on how to contribute or for complimentary research reports, visit www.naioprf.org.

NAIOP, the Commercial Real Estate Development Association, is the leading organization for developers, owners and related professionals in office, industrial and mixed-use real estate. NAIOP comprises 15,000 members in North America. NAIOP advances responsible commercial real estate development and advocates for effective public policy. For more information, visit www.naiop.org.

Cushman & Wakefield is the world's largest privately held commercial real estate services firm. Founded in 1917, it has 230 offices in 58 countries and 15,000 employees. The firm represents a diverse customer base ranging from small businesses to Fortune 500 companies. It offers a complete range of services within four primary disciplines: Transaction Services, including tenant and landlord representation in office, industrial and retail real estate; Capital Markets, including property sales, investment management, valuation services, investment banking, debt and equity financing; Client Solutions, including integrated real estate strategies for large corporations and property owners, and Consulting Services, including business and real estate consulting. A recognized leader in global real estate research, the firm publishes a broad array of proprietary reports available on its online Knowledge Center at www.cushmanwakefield.com.