Although demand for industrial space remains strong, rising interest rates and a looming recession has offered some prospective tenants more room to negotiate. Uncertainty about the overall economy is making credit even more important to landlords, and tenants with strong credit will have increased negotiating power – within reason.
Although IOS is seeing growing demand in line with the broader industrial property boom, it is still a volatile market with demand and rents accelerating faster in upcycles but also performing worse during economic downturns. And one of the reasons IOS tends to suffer disproportionately is the overall weaker tenant profile.
The San Francisco-based REIT reported 98% occupancy in its massive global portfolio in the first three months of the year — a slight increase from the same time in 2022 — as e-commerce spending picked up and helped drive leasing of warehouses.
It is expected the US will see a ‘meaningful’ downturn within the next 12 to 18 months. Consequently, a decline in the rate of warehouse construction is forecasted in the coming months. A significant decrease is expected in 2H 2023 and 1H 2024.
The first quarter findings show the South Florida industrial market remains on a stable trajectory, as demand continues to outpace supply. Companies keep wanting to take industrial space. Population growth and other factors all seem to be pointing in a positive direction.