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In the ever-evolving world of industrial commercial real estate, where shifts in demand, technology, and global dynamics create a complex market, staying ahead is not just strategic—it’s imperative. Alie Baumann, Director of Real Estate Intelligence at CompStak, and Justin Smith, Senior Vice President | Principal at Lee & Associates, teamed up to explore the currents of change, exploring key trends that define the landscape and charting the course for landlords, tenants, and investors in this dynamic era. 

Want to watch the recording? Check it out on YouTube here, and get the key takeaways on trends from our discussion below.

1. E-Commerce Ignites Growth

Despite an overall slowdown in transactions, the demand for larger, modern spaces driven by the e-commerce boom has sparked increased pricing and a surge in new constructions.

2. Lease Evolution

It’s no secret there’s an impending wave of lease expirations. There’s a significant volume set to expire by 2025, peaking in 2026. Concessions, notably free rent periods, indicated potential shifts in market dynamics.

3. Subleasing Dynamics

CompStak and Lee & Associates also dove in subleasing dynamics, emphasizing a rise in headline sublease availability. The resulting impact on direct lease pricing, particularly in LA County and the Inland Empire, indicated a notable divergence in pricing trends.

4. The Construction Conundrum

The future pipeline of industrial spaces took center stage, revealing a decline in construction starts. Concerns lingered over potential obsolescence of existing spaces and the challenge of meeting the demand for modern facilities with specific technical specifications.

5. Mexico’s Ascendance in Near-Shoring

Delving into global dynamics, Alie and Justin explored the concept of near-shoring. Mexico emerged as a frontrunner, offering cost-effective solutions for US companies. Comparative analyses of industrial rents underscored Mexico’s competitive advantage in the market.

6. Charting the Future

What are the risks and opportunities ahead? Factors such as lease expirations, CMBS loan maturities, and the evolving industrial real estate landscape are crucial elements to watch.

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