Industrial Insights - February 2025
Race to the Bottom
The industrial real estate market is approaching a bottom within the next two quarters. Landlords are protecting themselves against future rent increases by requiring either multi-year leases or escalation clauses. This strategic positioning means only one-third of available properties are genuinely open for standard five-year leases—the other two-thirds have multiple proposals or restrictive terms.
Tenants continue delaying moves, citing concerns about market pricing, tariff impacts, and overall business costs. When they do enter the market, each property presents unique negotiation challenges with varied landlord priorities. Deep-dive lease analyses are helping executives navigate these complex decisions.
Prologis Earnings Call
The nation's largest industrial landlord reported positive momentum. "They mentioned that they think market vacancy is topping out and rents will inflection later this year," with customer retention improving from 73.1% to 78.4% over twelve months.
Tenants who signed leases two to three years ago remain below current market rates, ensuring rent increases upon renewal. Prologis's Clear lease program appeals to tenants seeking straightforward contracts with controlled operating expense increases.
Rexford Earnings Call
Southern California's largest industrial property focus reported that "small to mid size tenants down only 8% over that of big box tenants who have shed the most space are down 25%." The company projects flat rent growth for the year.
Rexford's newly completed Class A properties feature above-standard finishes and office improvements, differentiating their portfolio.
Manifest 2025
This Las Vegas supply chain conference highlighted two dominant concerns: artificial intelligence and tariffs. Presentations addressed end-to-end supply chain visibility, nearshoring developments, EV infrastructure, and fleet innovations.
Annual Planning
Clients benefit from: - Broker Opinion of Values for owner-operated warehouses - Fair Market Value analysis for leased properties
- Competitive benchmarking for lease properties
- Market surveys for strategic relocation or acquisition timing
Call to Action
Clients are encouraged to communicate their annual intentions, enabling tailored strategies for maximizing value.