COLD - Industrial Real Estate: Opportunities Amidst Supply And Demand Boom

2024-03-25 13:12:43 ET

Summary

• Industrial real estate has experienced strong demand growth, leading to an increase in development of new warehouses.
• The supply and demand for industrial real estate vary by location, resulting in pockets of both strength and weakness.
• The future winners in the industrial real estate sector can be estimated by studying valuation and operating fundamentals.

Industrial real estate has been red hot for the past 4 years with demand growth skyrocketing as companies clamor to earn superiority in logistics. In 2022 and 2023, the demand boom started to be matched by equally ambitious development of new warehouses. With the strong demand absorbing the new supply the sector is overall in a healthy place, but both the supply and demand are lumpy in location and timing. As such, there are pockets of both unusual strength and unusual weakness.

This report will dig into the fundamentals of industrial real estate with an aim to discern the future winners from the rest of the pack. Valuation in the sector varies greatly making some of the REITs a bit bloated and others opportunistic....

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