- Industrial demand grows as companies stockpile materials to offset rising costs.
- Higher oil prices and ongoing inflation increase US real estate capital costs.
- Lenders are expected to remain selective, focusing on prime assets.
- Disruption in oil supply chains leads to greater warehouse demand and nearshoring activity.
Warehouse Activity Surges
According to Bisnow, amid ongoing conflict between the US and Iran, industrial demand is on the rise. Colliers’ latest report highlights how supply chain uncertainties and climbing transportation costs are driving companies to secure more warehouse space. Retailers and manufacturers are responding by stockpiling essential materials and ramping up imports to protect operations.
Capital Costs Climb
The Iran war’s impact on oil prices, which remain near $90 per barrel, continues to fuel US inflation and push up real estate capital costs. The 10-year Treasury yield reached 4.3%, up 30 basis points since March, signaling that interest rate cuts are unlikely in the near future. Lenders remain cautious, with conservative underwriting likely to persist and only top-performing assets able to attract refinancing, a dynamic that aligns with broader trends showing income stability even as overall returns come under pressure.
Longer-Term Market Effects
The ongoing unpredictability in the Strait of Hormuz has created higher shipping, fuel, and production costs. Industrial demand, particularly for warehouse space, is expected to keep increasing as firms prioritize resilience. Colliers notes that nearshoring could rise, but increased operational costs may continue regardless. The CRE market is expected to remain disciplined, mirroring post-pandemic caution as both lenders and borrowers await more favorable conditions.
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