12/03/2024
A lack of demand for industrial real estate? Not necessarily so for small to mid-size tenants and owners of multi-tenant buildings.
A recent article in the Orange County Register analyzed the current decline in demand for industrial real estate. While I agree with much of its perspective, there's an important caveat: the trends it highlights apply primarily to large spaces and mega-tenants.
In my experience, the market for small to mid-size units and multi-tenant industrial buildings tells a different story. Yes, there’s been a correction—longer vacancy timelines and a slight reduction in pricing—but the dynamics at play are nuanced.
Unit size makes all the difference. Large warehouses (e.g., 100,000 sq. ft.) naturally have fewer prospective tenants. When supply outpaces demand for these spaces, the market takes a hit. However, for smaller spaces, it’s a different ballgame. There’s a strong demand for units in the 2,000–10,000 sq. ft. range, driven by businesses like gyms, construction firms, distributors, auto body shops, and others that don’t require mega spaces.
And post-election market sentiment matters. When the article was written, uncertainty surrounding the election created hesitation in the business and investment communities. Now, with the election decided, we’re seeing signs of stabilization. While opinions on the results vary, one thing is clear: conservative leadership has alleviated investor fears of increased long-term capital gains taxes, creating a more favorable environment for commercial real estate transactions—at least for the next four years.
For owners and investors of smaller industrial properties, these nuances mean opportunity is still alive and well. The market correction isn’t uniform—it’s a reminder to stay informed and strategic about your investments.
Read the original article below, then call me to find out how you can benefit from the current market.
https://www.ocregister.com/2024/10/19/whats-causing-the-lack-of-demand-for-industrial-real-estate/
Daniel
818-419-3749
