Industrial occupancy, rental growth to ease further: experts
Huttons said rents of industrial space may see not more than 3% growth in 2023.
With the weakness of manufacturing and NODX likely to persist in 2023, real estate experts expect occupancy and rental growth of industrial spaces to ease further in the remainder of the year.
Huttons said the weak IP print and NODX will impact demand in the market.
“The higher-than-usual supply in the pipeline will create an overhang in the industrial market and occupancy could trend lower. This may add downward pressure on prices and rents in 2023. Prices and rents of industrial space may see not more than 3% growth in 2023,” Huttons added.
Knight Frank, for its part, predicts that price and rents will post a marginal growth of 1% to 3% for the whole quarter.
Across property types, Cushman and Wakefield believe that prime logistics will perform well, adding that it can witness double-digit rental growth in 2023 “as underlying demand from 3PL players remains surprisingly resilient, despite an easing of supply chain challenges and a weaker economic outlook.”
Colliers also believes that weaker demand relative to new supply will likely lower leasing interest and activity, thereby spurring existing landlords to give in to lower rents.
“As such, occupancy and rental growth are expected to continue to ease,” Colliers added.
Landlords with new and quality assets are in a better position to weather the uncertain economic environment, according to CBRE.
“With choice spaces remaining limited, further rental increases in the near term can be expected, in particular, for prime logistics space. Landlords of older developments may consider embarking on asset enhancement initiatives and redevelopment works to remain relevant or offer incentives to retain tenants,” CBRE said.