Industrial occupier market outlook 2024
The latest Cushman & Wakefield Industrial and Logistics Occupier Outlook report has just been published, July 2024.
Here’s the summary in 8 key points:
1. Normalised Demand for Warehouse Space:
After three years of unprecedented growth, warehouse space demand has stabilised over the past six months due to broader economic conditions, rising debt costs, and persistent inflation. However, current demand still surpasses pre-pandemic levels.2. Demand Drivers:
Increased e-commerce adoption, a focus on supply chain optimisation and resilience, population growth, and continued investment in transport infrastructure will support leasing demand. Economic growth in 2025 is expected to further boost demand, especially from discretionary warehouse occupiers.3. Leasing and Vacancy Rates:
Despite increased speculative supply, high pre-commitment levels will keep vacancy rates below the market equilibrium of 5% over the next 12 months. This ensures a stable leasing environment across major cities.4. Rental Growth:
Rental growth is forecast to remain strong, with approximately 6% growth in 2024 and 5% in 2025. Markets with limited land supply are expected to see even higher growth rates.5. Automation and Technology:
The adoption of automation and technology in greenfield markets and facilities with pre-commitment availability will support leasing demand. Larger occupiers are focusing on automation to drive efficiencies and reduce costs.6. Inventory Management Concerns:
Inventory management remains a significant concern for occupiers due to volatility in stock levels and supply chain uncertainties. High lease renewal rates are expected as occupiers prefer to retain space amidst fluctuating demand.7. Economic Headwinds:
High interest rates and inflation are impacting occupier balance sheets and reducing consumer spending power, particularly affecting discretionary spending. Occupiers are investing in automation and targeting cost-saving locations to mitigate these pressures.8. Supply Chain Volatility and Geopolitical Risks:
Broader geopolitical issues and supply chain challenges will continue to influence occupier leasing strategies. The need for supply chain resilience has led occupiers to hold more buffer stock and explore hybrid inventory management models.