Industrial Real Estate Development Heads for “Cyclical Reset”
Cushman & Wakefield’s newly released Industrial Construction report shows demand losing speed as construction completions peak, setting the stage for a return to a more balanced market. Although first-quarter new construction deliveries are up 40% from this time last year, with 129 million square feet coming on line, starts were down 60% from Q1 2022 levels and 34% from Q4 2022.
Most developers and owners have started to pull back on launching new projects as demand slows. While the moderating of starts is a positive sign, the threat of oversupply in some markets and submarkets remains, the report said.
“We have started to enter a cyclical reset to the market after two years of unprecedented demand, and the space under construction is nearly four times the size of the pipeline was at year-end 2007,” said Carolyn Salzer, director, Americas head of logistics & industrial research at Cushman & Wakefield.