Real estate rents to rise 10% this year, Prologis report says
May 19, 2023 | Mark Solomon | Freight Waves
Logistics real estate rents will rise 10% this year, with vacancies expected to drift upward into the low to mid-4% range from levels of 3.7% at the end of the first quarter, according to a forecast by the research arm of logistics development giant Prologis Inc.
Rapidly rising interest rates have resulted in a 40% drop in year-over-year construction starts compared with mid-2022 as businesses stepped away from deals because of higher costs. Vacancies will rise in 2023 as the existing construction pipeline is spoken for, according to the report. However, the cutback in starts will impact supply greatly, leading to another downtick in vacancies and uptick in rates during 2024, said the report, published Thursday.
“The current environment has impacted construction development more than demand thus far,” the report stated. “As a result, it’s imperative to think ahead, particularly in the most sought after markets where vacancies will remain lower with new supply forecasted to drop off heading into 2024.”
