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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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Keep On Trucking: Little Dimming Outlook For The Industrial Sector According To Latest NREI Study

Neither ongoing international trade disputes, nor the warning signs of a potential recession, nor the uncertainty that’s emanating from a particularly fraught U.S. presidential election year are enough to dim the enthusiasm for the industrial real estate sector, according to the findings in NREI’s sixth annual study.

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