Takeaways from the Colliers’ L&T Solutions Group Session on the Economy & Industrial Real Estate

Earlier this month KC Conway of Red Shoe Economics presented to Colliers’ Logistics & Transportation Solutions (L&T) Group at our meeting in Dallas. He shared his insights on the current economy and what the future may hold for industrial real estate. I had the pleasure of attending this session.

Below are the highlights:

It’s not ALL doom & gloom:

• Demand for industrial is expected to rise over the next two years

• Current demand continues to outpace inventory due to the continued strength of e-commerce combined with the rise in on-shoring/near-shoring

• Oversupply risk is low, despite a robust development pipeline for 2023

• Construction costs may go down because of a slowdown in residential construction and decreased Amazon building activity. Amazon has reportedly scrapped plans for up to 42 new buildings

What 2023 might hold:

• The Federal Reserve is signaling to banks to stop lending by raising rates; rates may continue to rise

• Labor availability may continue to be an issue

• Access to water might be a key driver for site selection, especially in states which are dependent on the Colorado River. This will likely impact facilities with high water demand, such as chip manufacturing

• The U.S. supply chain may transition to a North-South network, as East and Gulf Coast ports see an increase in activity coupled with existing rail connectivity