It has been a rough start to the 4th quarter with news of historic storm damage from Hurricane Helene and Milton. Beyond that, war in both Ukraine and the Middle East create additional uncertainty. Currently there are more than 45 armed conflicts in the Middle East and North Africa alone, and another 35-armed conflicts in other regions of Africa, as reported by Geneva Academy.
Investopedia.com reports the following storm statistics last week:
About 2.8% of the U.S. Gross Domestic Product lies in the path of Hurricane Milton, one estimate showed.
The analysis showed that while it is difficult to calculate, Milton could have a measurable impact on GDP.
Atlanta Fed President Raphael Bostic said he was monitoring the economic impact of recent storms in his district and warned that increased insurance costs from weather disasters were becoming a “big problem.”
While inflation is now down to an annual rate of 2.4%, the interest rate increases of last two years have managed to keep a lid on meaningful investment activity in most commercial real estate sectors.
In Salt Lake City we continue to see improvement in our industrial sector, with diminishing sublease space availability and inventory in smaller space increments tightening. In fact, overall net absorption outpaced construction deliveries at mid-year according to our friends at Newmark.
Anecdotally, manufacturing interest and activity is buoyant. At IPG we are tracking several manufacturing requirements currently surveying the market with anticipation of making deals in the next 6 to 12 months.
Our anticipation is that the market will continue to favor quality tenants with notable leasing incentives for at least the next two quarters. Building owners are advised to do what they can to make the best first impression for prospective tenants.
Considerable viability in larger increments of warehouse space over 200,000 will be the “blue light special” for groups consolidating, expanding, or renewing leases.
While consumer sentiment in Utah is slightly off that of the national trend, that conservatism is part of what has created long term stability and viability here in Utah. We predict a return to balance in the next 12-18 months.
Whether your industrial real estate needs lead you to Utah, or any place else in the Nation or the Globe, IPG can help navigate through the unknowns and uncertainties.
Reach out and let us know what you are experiencing