Investor Interest In Industrial Sector Remains Resilient Amid Market Challenges

Despite ongoing concerns around tariffs, inflation, and waning consumer sentiment, investor interest in the industrial real estate sector remains robust.

“Industrial continues to be a favored asset class for investors, even as operational performance has moderated,” said Al Pontius, National Director of the Office and Industrial Division at Marcus & Millichap.

He noted that while supply is expected to outpace demand again this year, pushing the national vacancy rate to around 7.5% by year-end, investor appetite remains strong. Pontius attributes this resilience to several factors. Notably, capitalization rates have adjusted in response to rising interest rates and slower rental growth, creating more favorable entry points for buyers than in recent years. Additionally, confidence is building around a projected decline in new industrial development, with delivery timelines now stretching to nearly two years—a sign of tightening future supply.

“We’re just coming off what I’d call a post-pandemic surge in industrial space demand,” Pontius explained. “There was a time when concerns over supply chain reliability drove significant demand for warehouse and distribution space. That urgency has subsided as markets have rebalanced, leading to a more normalized relationship between supply and demand.”

Looking ahead, Pontius anticipates that vacancy rates will begin to decrease again by 2026, as the slowdown in new deliveries gradually restores market equilibrium.

Source: GlobeSt.