Industrial space rents across the U.S. have shown an upward trend at the start of the year. However, the sector faces challenges that are posing a threat to the bright spot in commercial real estate.
The world’s largest industrial developer and landlord announced a spike in warehouse leasing activity following the U.S. November election, which has improved the company’s outlook for warehouse demand in 2025.
The industrial sector led the way in investment sales, contributing $22.8 billion in the fourth quarter, a 31% increase from the prior quarter. Looking ahead to 2025, investors are expected to continue favoring industrial and e-commerce assets.
The Yardi-owned company forecasts that a significant rise in new construction in 2025 is unlikely and that the focus in the industrial sector will largely be on developing data centers and manufacturing facilities, as demand for these spaces persists.
Trade tariffs may lead to inflation and recession, as seen in the past, with profound effects on the construction sector, impacting both costs and demand. And immigration policies that induce fear among workers could worsen the ongoing labor shortages in construction, making it harder to recruit and retain skilled labor.