COVID-19 created extreme market conditions that led to increased inventory holdings and strong ecommerce growth. This, in turn, created a spike in warehouse demand. Warehouse capacity as well as labor was difficult to find in several U.S. markets and drove costs higher.
Since mid-2022, the U.S. industrial real estate market has experienced a steady increase in vacancy rates. Additionally, market conditions have shifted in favor of tenants, diminishing owners’ ability to raise rents aggressively in some locations.