Is the Industrial Real Estate Market Cooling Down?
Although many headlines indicate this to be the case, this may be a bit of an overstatement. While the overall vacancy rate has experienced a slight uptick in recent months, the majority of this has been experienced in mega-warehouses (250k+ SF). Pricing has remained stable and continues to increase in smaller building SF ranges (30k- 150k SF), and hot-bed markets, such as the O’Hare and I-55 markets.
Additionally, companies including Prologis, the global leader of industrial real estate facilities, and Sterling Bay, a growing real estate investment company traditionally focused on alternative asset classes, have made investments within the industrial sector of Chicago’s south/west suburbs:
While a lot of companies have scaled back investment due to increasing interest rates and decreased purchasing power, many remain to have a bullish outlook for the industrial real estate market, in particular. Many believe the industrial sector is “recession-proof,” continuing to be “an attractive place for capital investment, especially well-located and high-quality portfolios:”
Further, vacancy remains near all-time lows comparatively to historical trends, and “is getting back to a pre-pandemic normal.” With less speculative development projects ongoing, the vacancy rate is not expected to increase significantly, which will keep rents where they are currently, or increase.
Private buyers are comparing a building purchase to leasing rental rates. Although overall purchasing power has decreased, privately-held and family-owned businesses are able to make better sense of the higher interest rates – in line with increasing rental rates. With more institutionally backed counterparts moving to the sidelines, the expectation is that more purchase and sale opportunities should arise.
Commercial Real Estate Professional
1 年https://www.bisnow.com/national/news/industrial/amazon-could-soon-have-more-than-100-same-day-delivery-centers-in-the-us-120629
Student at University of Southern California
1 年Thank You for the Updates Rob. Interesting to see that larger warehouses' vacancy rates are increasing in the Chicago area
Architectural Products Specialist
1 年Thanks for the update Rob Sullivan, Bespoke Commercial Real Estate
This is the kind of info people want. Keep it up!