Q3 2023 Occupier Outlook - Industrial

Industrial Sector Downshifts After Several Years of Growth

The industrial market has been more reflective of future growth than in previous quarters as an abundance of new construction hit the market. The national vacancy rate has trended higher for the past five quarters but is still well below historical averages. Still, the industrial market is showing that recent headlines of a slowdown are likely short-lived, with Amazon reporting sales have been rising and plans to continue to shrink their exposure in distribution space are being curbed. Another sprint higher in the industrial market is being tempered by high-interest rates and generally soft consumer confidence in the broader economy.

Industrial Tenant View

• Occupiers are preparing for drags on household finances, including elevated energy costs and multi-decade highs in credit card interest rates to plan for future space needs.
• Second-generation space is now becoming more readily available as occupiers move into new space.
• Emerging markets with lower costs such as labor and real estate are becoming increasingly desirable.

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