June 2025
This month, we turn our attention towards emerging trends in industrial real estate.
IN THE MARKET
The Emerging Industrial Divide
As global uncertainty continues to dominate headlines - from geopolitical tensions in the Middle East to alarm over U.S. debt and deficits to trade disputes to election surprises in NYC - our attention shifts toward the more resilient end of the commercial real estate risk spectrum: industrial.
Over the past several years, industrial real estate has emerged as one of the top-performing sectors. The COVID-19 pandemic accelerated the shift from brick-and-mortar retail to e-commerce, triggering a surge in demand for logistics and distribution space. E-commerce now accounts for approximately 16% of total retail sales, with plenty of room to grow. According to CoStar, U.S. industrial supply has expanded by 2.0 billion square feet — a 12% increase — over the past five years. This rate of growth is nearly triple the pace of the previous two decades. Simultaneously, asking rents surged by more than 40%. However, after hitting a historic low of 3.8% in 2022, vacancy rates have nearly doubled to 7.4% as of Q2 2025. With rising vacancies, rent growth has stalled, turning negative in Q2 for the first time in nearly 15 years. While we don’t foresee the level of distress affecting other property types, this softening marks the first meaningful opening in years for both tenants and investors.
A closer look reveals a bifurcation within the sector…
The June edition also covers AI impacts on employment, (even) more news on nuclear energy, and significant investments in AI and AI infrastructure…
Read the Full Edition Here