Slowdown in Industrial Sector Likely, Which Could Favor Investors, JLL Reports

By Michael Tucker

After several quarters of record-breaking high rents and low vacancies, the industrial real estate sector will likely "pause" soon, said JLL, Chicago. But it said that could be good news for smart owners, investors and occupiers.

The U.S. economy has cooled somewhat in recent months as interest rates have increased. This slowing economic growth has an upside for the industrial property sector, said JLL Americas Industrial President Craig Meyer.

Meyer noted the business cycle is in its late phase but called a pause "an opportunity to close the gap between demand and supply of industrial property--and that gap is significant," he said.

The industrial vacancy recently fell to a record-low 4.8 percent, though new space is coming online quickly.

Meyer said companies will need a "street-level" understanding of market-specific dynamics to be successful should the industrial market slow significantly. "While anyone can succeed in a rising tide, only smart operators thrive in a slowing environment with an uncertain outlook," he said. "In this environment, it's the operators who combine knowledge, experience, discipline and data-driven insights that will prevail. Being street-savvy is the right strategy for today."

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