Where to Find Industrial Supply in 2024

New industrial supply is expected to slow next year and the year beyond in 2025, according to CommercialEdge. To date, 204.3 million square feet of industrial space are underway, but that’s down from 614.1 million square feet last year and from 586 million square feet in 2021. Several reasons account for the change, from lessening demand that is normalizing from higher levels in prior years and the double whammy of interest rate hikes and tougher lending standards, both of which make financial deals more expensive and harder to move forward. Speculative development also poses greater risks because of inflation affecting material and labor costs, and the overall economy continues to cause great concern.

Tenants are coping by calling on a host of different strategies. Many firms, the report said, have moved from just-in-time inventory management to just-in-case, which reduces exposure to supply delays. But this approach requires more warehouse space. Online sales require more logistics space than brick-and-mortar due to the need for larger distribution networks and decentralized ones for quicker delivery. “As development expectedly slows down, there will still be immediate bright spots in locales supporting these massive semiconductor and EV manufacturing projects,” said Peter Kolaczynski, CommercialEdge Senior Manager. “Based on the current slowdown coupled with future demand drivers, we’re projecting increased competition for space and the need for future deliveries 3-5 years out,” he said.