Nationwide-RE addresses Resilience of Supply Chain in 2023 and the outlook for the Industrial Market in 2024
Following a period of market volatility charged by bank failures, demand in the industrial real estate market has returned to normal levels. Factored together with increasing rent, lower vacancy rates, and a decrease in construction starts, this points to a competitive 2024 with fewer options for prospective tenants. Prologis reports a 40% decrease in new construction starts over 2022, with experts predicting a vacancy rate in the “mid-3% range by year-end 2024.
Now more than ever, Nationwide-RE seeks to leverage its reputation as a network-oriented boutique firm to continue providing clients with solution-oriented strategies. The team’s current objective is to advantage of the resilience of the supply chain and use prospective analysis to make the best deals in the industrial market in 2024.
Nationwide-RE utilizes a vast network of both real estate and financial players to help clients through independent real estate projects, gain access to land necessary for development projects, and secure financing. This formula has steered Nationwide-RE through 3 consecutive years of growth through uncertain times and Nationwide-RE predicts a bright future ahead for itself and its clients.
Industrial availability, or the amount of space on the market for lease, is quickly rising in the Dallas-Fort Worth region, led by buildings of 500,000 square feet or more. Almost 16% of properties of that size are now available, up from 9% in mid-2020.
That is above the norm for Dallas-Fort Worth’s industrial market as a whole, though it too has seen an increase in availability rates, which have risen from 8.7% to 10.7% over the same period.
A little over two months ago, Oxford Economics called for a mild recession to begin in the summer of 2023. In particular, the firm prognosticated that Chicago’s economy would face challenges due to its large manufacturing sector.
Yet Chicago has been relinquishing its manufacturing-sector dominance steadily for over 20 years, according to CoStar data. It is questionable whether the sector still has the same impact on Chicago’s economy.
At 0.5%, the portion of industrial space listed for sublease in the United States is limited and amounts to a small fraction of the current 2.0% sublease rate within the nation’s office market. However, industrial sublease offerings are rising quickly.
Space listed for sublease across all existing and under-construction U.S. industrial properties began to increase in the summer of 2022, just a few months after the Federal Reserve began raising interest rates to slow economic growth and tame inflation.
2022 was a year of record global rent growth in nominal and real terms, since Prologis Research began tracking in 2007. Global rents grew by 30% year-over-year (real growth 21%), accelerating significantly beyond the prior record of 17% (10% real in 2021)i. The restructuring of global supply chains for added resilience, in conjunction with the build-out of e-fulfillment capabilities produced strong demand for space. Competition for space in 2022 continued to be intense as increased land scarcity, rising regulatory barriers and escalating construction costs slowed new supply in prime locations.
