Driven by ongoing population growth, low costs, strategic infrastructure access, and a favorable business operation environment, industrial vacancy rates remain below pre-pandemic averages, and rental rates continue to rise in key markets in the Southeast U.S.
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.
The national industrial vacancy rate has climbed by 30 basis points during the third quarter to reach 6.4%, according to Cushman & Wakefield’s latest industrial segment research.
Artificial intelligence is expected to drive demand for data centers and is giving the world’s largest industrial property company tremendous confidence in future growth. Every time a warehouse is converted to a data center, Prologis pick up $500 a foot of value.
The temporary downturn will slow the rise in warehouse rates, but won’t send them into decline, as has happened in transport modes, according to analysts. They project the vacancy rate to creep up to 6% by the end of 2024, still tight by historical standards, and it should keep pushing pricing higher. CLICK ON THE HEADLINE FOR MORE