Market Outlook for 2024
The industrial real estate market is continuously evolving and undergoing significant transformations. Some of these changes include shifting consumer behaviors, technological advancements, and economic developments.
Hybrid office models remain popular, and landlords have been exploring financially innovative methods to repurpose office spaces in the post-pandemic period. These strategies involve incorporating cutting-edge technologies, utilizing shared co-working areas to save space, and transforming offices to include more collaborative environments for employees.
In the past year, a notable change has occurred in the industrial sector. With consumers increasingly turning to e-commerce platforms and driving the growth of online sales, there has been a significant surge in the demand for industrial real estate. This trend creates new prospects for the sale, purchase, and leasing of warehouse and manufacturing properties, as well as for establishing gas stations and rest stop areas for the trucks that transport goods to and from these locations.
The integration of automation in warehouses is revolutionizing the industry. Automated guided vehicles (AGVs), robotic picking systems, and smart inventory management are becoming standard features in modern warehouses. These technologies enhance operational efficiency, reduce labor costs, and improve accuracy, making them attractive investments for businesses looking to re-think or optimize their logistics operations.
We are starting to see smaller requirements in the 3-5,000 SF range, 10,000-15,000 SF range, and 50,000 SF range. Over the last few years, there has been a surplus of large-scale requirements ranging from 200,000 SF all the way up to 1 million SF due to how profitable companies like Amazon, Walmart, and Home Depot were. This could indicate a sign of local users returning to the marketplace.
After 2 million SF of new development projects were delivered at the end of 2023, just under 900,000 SF of industrial product remain, which is down from over 2.9 million SF in the previous quarter. This is most likely due to high borrowing costs which continued to create a difficult financing environment for new construction.
In 2024, significant changes are expected in the way commercial real estate operates. By understanding these trends and their advantages, you can capitalize on these scenarios and make 2024 your most prosperous year yet.