In her keynote at NAIOP’s I.CON East this week in Jersey City, New Jersey, Cushman & Wakefield Head of Quantitative Insights and Principal Economist Rebecca Rockey argued that AI, demographic shifts and growing geoeconomic fragmentation are rewiring the global economy, as nations and firms re-evaluate the tensions between pure efficiency and resilience – a transition with major implications for industrial real estate and supply chains.
“We are now well into a regime shift in the global economy that will not be undone,” she said. This shift started with President Donald Trump’s first term, continued through President Joe Biden’s term, and persists in Trump’s second term. And it is not just happening in the U.S.
This period in the global manufacturing landscape is also colliding with the rise of AI and the potential for automation, Rockey said. At the same time, a “silver tsunami” is facing most regions of the world as record numbers of baby boomers retire from the workforce without skilled labor ready to take their place.
“This convergence of factors means that there are structural shifts that are going to dominate the landscape, both on the economic side and on the property market side,” Rockey said. “There are foundational things that will change; understanding them and integrating them into strategic frameworks for thinking about capital deployment is going to be essential, and I would argue a differentiator for investors over the next decade.”
“The near-term cycle matters,” Rockey acknowledged. “I don’t want to downplay that, but we are in a shift away from decades and decades of certain trends, and that results in underlying structural momentum which had not existed, [and which] started in Trump’s first term.”
Economic growth is uneven, Rockey said, whether you look at it by sector, by market, or income group. “Some markets are expanding, some industries are expanding, some are in contraction.”
Economic growth is being driven by three “A’s,” she said: Asset Values, Affluence (the share of spending by upper income households in the U.S. population) and AI, which itself is symbolic of the broader government focus on expanding the productive capacity of the U.S. economy.
Since the advent of ChatGPT, the value of the entire U.S. equity market has risen by $32 trillion, Rockey noted. “For some perspective, our national debt is $39 trillion,” she added. For every dollar of additional wealth from higher asset values, U.S. consumers tend to spend about three more cents. In other words, people spend more when they feel wealthier, even if they are not flush with cash.
“So, if you do the math in any given year since COVID-19, this [wealth effect] has added roughly 30 basis points at a minimum to headline GDP growth,” Rockey said. “And in some years like 2024, potentially up to 70 basis points of headline economic growth came from the consumption effects that high asset value had on consumer behavior.”
“The top income deciles in the U.S. economy are accounting for a historically large share of spending,” Rockey said, noting the disparity of income distribution across the country. “This is an uneven economy, but affluent households are not as price-sensitive the way that lower income households are, so when gas goes up to $4.50 a gallon, their behavior does not change in the same ways that a broader base of consumption would change.”
“We can’t not talk about AI,” Rockey said, while also stressing that the rapid rise of AI needs to be considered in context. Rockey said that starting with Trump’s first term, the U.S. government has, for the first time in decades, been actively trying to strengthen America’s ability to produce things. This can be through the tax code, incentives, federal spending, tariffs and trade agreements.
“AI is just another line item in the supply side of the U.S. economy that allows us to be more productive,” Rockey said, “Productivity is the engine of growth that results in higher well-being.”
“I think that there’s a little bit more underlying resilience to the economy than we sometimes give it credit for,” she said, although she noted that her firm has downgraded its projection for growth specifically due to the ongoing conflict in Iran.
“I think it’s still reasonable under a pretty wide set of baseline assumptions to assume that we’ll get a [GDP] growth year in the 2%-2.5% range,” Rockey said, “And that’s a pretty decent year.”
Starting even before COVID-19, we’ve moved from an era solely focused on efficiency to one where we’re focused on resilience because of supply-side shocks to the economy, Rockey said. The shocks in those years have been many: along with COVID-19, there’s been the Russia-Ukraine war, significant trade and immigration policy changes, and more recently, the conflict in Iran.
“And the Federal Reserve’s toolkit is really designed for demand-side shocks, which have been predominant over the last several decades [relative to supply-side shocks]. This is a new world of more frequent disruptive supply side shocks and a period of time where resilience is going to matter more, and the calculus therefore changes.”
“I think the macro story in industrial real estate has been pretty consistent across the last few years,” Rockey said. “We knew in the aftermath of COVID-19, particularly as rates started to rise, that demand was going to cool off. It would also cool off because a nontrivial share of pandemic demand was pulled forward from future years – a giveback was inevitable.”
“We had rates go up, so we had interest-rate-sensitive spending start to pull back at faster paces,” Rockey said, “And ultimately, we had a huge amount of construction that was coming, so we knew vacancy was going to go up from its cyclical low (2.8%), which was unprecedented in our data.”
“Ultimately, there’s going to be shifting structural demand that originates from the forces that I talked about, in particular, global supply chains and manufacturing, and the effects are not just national,” she said. “You’re going to hear me talk about different geographic corridors in the country because these are a starting point for understanding relative competitive advantages, and from there we can go down to the city, the submarket, or asset level.”
Regions in North America that score highly on factors such as highway and rail access, affordable and available infrastructure, labor availability and related metrics include Texas, the Southeast, the Midwest, the Intermountain West and Rocky Mountain Corridor, and Mexico.
Different parts of the country offer different strategic advantages; parts of California might have higher tax rates, higher cost of labor and higher energy costs, but they also benefit from access to goods coming from Asia and proximity to large population centers (and therefore labor). The West Coast generally boasts pockets of highly skilled workers that are difficult to find elsewhere at scale.
Labor is a crucial consideration for industrial real estate; not only does labor typically make up 50% of operating expenses, but the industrial workforce is old – and getting older.
“About a quarter of the industrial workforce is eligible, or will be eligible in the next few years, to retire,” Rockey said. One result of this is that companies are focusing more on fully autonomous warehouses and integrating them strategically into their supply chain.
“There is an economic imperative to do this,” she said.
Rockey said that automation is “moving from a ‘nice to have’ to a necessity, and that’s really kicking into high gear.” Automation, of course, has different needs than a traditional warehouse, with significantly more power requirements, heavier floor loads and potentially a longer horizon for return on capital expenditures.
From a portfolio perspective, integrating more automation-ready facilities can help balance risk. In addition, the diversification of the industrial tenant base can allow for what Rockey calls “thematic occupancy:” analyzing who tenants are, what their industries are, noting any cyclicality in those industries, and deciding if that exposure is the preferred strategic approach.
Ultimately, Rockey emphasized that the winners of the next decade will be those who build resilient, strategically flexible portfolios aligned with the dramatic reshaping of the global economy.
This post is brought to you by JLL, the social media and conference blog sponsor of NAIOP’s I.CON East 2026. Learn more about JLL at www.us.jll.com or www.jll.ca.
