By Jason Crimmins, CCIM, SIOR, The Blau & Berg Company
2024 has been a year of adjustments thus far for industrial investors, brokers, tenants, and landlords.
The rapid change in the market since the effects of COVID-19 and the pandemic created an explosion in demand for supply chain space, resulting in a meteoric rise in associated costs that peaked in April 2022.
Since that time, IOS rents have decreased by approximately 40%; however, in the last two months, these rents have stabilized. Warehouse rents have also stabilized, as more TI (Tenant Improvements) and abatements are offered as landlords are adjusting to the market and realizing that such offerings are increasingly necessary to secure a tenant.
Warehouse vacancy rates have increased from 5.5% to 6%. There is sustained demand in and around the port areas, as last-mile e-commerce operators value proximity. Tenants coming off long leases are still experiencing sticker shock over renewal rates, and some are seeking space outside their preferred locations for cost reasons.
Election years often prove to be historically slow, and 2024 is shaping up to be the same. Many want to see where fiscal policy is headed before making long-term commitments. With interest rates high, and uncertainty in the overall economy, the motto right now is “Survive until 2025”.
Jason Crimmins, CCIM, SIOR, is the president and broker of record for The Blau & Berg Company, an independent, full-service commercial real estate brokerage firm providing services in the industrial, retail, and office spaces.