Area Development: Strategies to Overcome Intensifying Industrial Real Estate Challenges


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Each turn of the calendar brings with it the excitement of new opportunities and adventures. While 2023 is no different, this new year also presents a healthy dose of uncertainty. In 2022, we saw significant growth and investment across sectors. Expansion took place in the face of — and often despite — two defining limitations in the market: labor and industrial real estate availability. Unfortunately, trends indicate a challenging future for the industrial real estate environment. 

Low Vacancy Rates: A Mixed Bag

Constraints in the industrial real estate market are well documented. Industrial vacancy rates in the U.S. fell to historic lows during 2022 and finished the year at a crippling 3.0 percent — half the normal range of 6–7 percent. Las Vegas exemplifies this challenge with a vacancy rate of 1.5 percent. Detroit (1.8 percent) and Boston (2.6 percent) provide additional acute examples of this current dynamic. Toronto’s massive industrial market (the fourth-largest market in North America) spent 2022 below 1.0 percent.

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