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Industrial Tenants Face Sticker Shock Amid Spiraling Inflation

Red Right Arrow Ahead Showing Increase Profit Income

Renters of industrial properties are facing sticker shock in the current inflationary environment, with national effective rent growth expected to increase nearly 23% year over year in 2022.

“Although industrial has a reputation for shorter lease terms, the reality is that the weighted average lease term for industrial is around five to seven years, much like it is for office,” write Cushman & Wakefield economists Rebecca Rockey and James Bohnaker in a new analysis. “Many of the leases that are rolling today are therefore significantly underpriced on the tenant side, especially with escalations that may have been negotiated five to seven years ago.”

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Industrial’s Hot Streak Projected To Hold

New numbers have confirmed that 2019 was a monumental year for industrial real estate, with total volume soaring to a record high of $102B, JLL reports.

That propulsion is expected to carry into 2020. JLL predicts industrial volumes in 2020 will continue to boom, with large-scale portfolio deal flows that are slated to finish during the first two quarters of 2020.

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