SIOR Blog So What Do Developers Do Now…?

The following article is sponsored by Panattoni Development Company. It is hard to argue that the industrial real estate market from approximately the fall of 2020 to early in 2023 was not the sector’s “golden age”. Defined by unprecedented demand for warehouse and fulfillment space, rapidly decreasing vacancies in many markets across the country and the compression of exit cap rates into numbers we could have never imagined would happen, this period was remarkable. This combination, despite the obvious constraints on everyday life brought on by the pandemic, led to an enormous boom in industrial real estate development. Despite record production in many markets across the country, development did not keep up with ever-growing demand. This demand led to double digit rent growth as tenants panicked that they would not have space and landlords were able to raise rents quarterly if not monthly. The insatiable demand for space also led to escalating land and construction costs.