Taylor Wood says bargaining with warehouse owners for storage space is far different than during the pandemic, when demand for industrial space was red hot.
“I’ve never seen a market like that, where we were basically scratching and clawing for every building,” said Wood, a broker at real estate services firm Savills. “There were five offers on every building.”
Now, Wood sees signs rents are flattening nationwide and even ticking down in some logistics-heavy markets like Southern California that were effectively sold out for years. Warehouse owners remain wary about publicizing lower rents, but there are more deals to be had and concessions being offered, he said.
“We’ve got these delayed start dates, we’ve got excess free rent, we’ve got more tenant improvement moneys,” Wood said.
Rents are even falling in some markets as the urgency to find space and stock up on inventory recedes, and leasing rates are plateauing, according to reports from real estate services firms Cushman & Wakefield and Savills.
The average asking rent for industrial real estate in the first quarter stayed flat at $9.73 per square foot per year, the first time in four years it didn’t increase on a quarterly basis, according to Cushman.