While the amount of space under construction remained high, new starts have started to slow, reflecting the current economic issues.
Rising interest rates have pushed loan coupons higher, lenders are cutting back to varying degrees and property fundamentals are weakening.
In a challenging economic environment, tech companies continue to trim their office footprint, pushing up vacancy rates.
Although transaction activity slowed considerably in Q1, industrial remains among the most desirable asset classes.
With so many headwinds impacting the sector, office landlords are faced with tough decisions as the future of offices remains unclear.
Albeit transactions slowed across commercial real estate sectors, the first two months of the year saw $3.9 billion in industrial sales.
With weak demand and high interest rates, refinancing offices will be challenging unless they include solid leases with high-quality tenants.
Industrial leases signed in the last 12 months reached a national average of $9.01 per square foot, $1.88 more than in-place contracts.
Amid economic uncertainties and vacancy woes, the sector is expected to record one of the smallest sales volumes since the Great Recession.
While industrial deliveries hit a new high in 2022, supply is still behind demand, and 2023 is set to be another robust year for development.
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