The 2024 Colliers Supply Chain Conference, hosted by Colliers’ Logistics & Transportation Group, provided a comprehensive overview of the current state of the industrial real estate market.

The supply chain landscape has been significantly impacted by changes in interest and capitalization rates, resulting in a sluggish development environment. However, despite these challenges, there is a positive outlook for 2024. The market is in a better place now compared to January of this year, positioning 2024 as a transition year leading into an optimistic 2025.

Hosted in Toronto, this year’s conference offered attendees the opportunity to learn from speakers covering topics such as the state of transportation, emerging development strategies, economic insights and more.

Current Market Dynamics: Demand and Development

In specific sectors, there remains strong demand in the sub-100K square foot market, indicating resilience. This year is also seen as a prime opportunity for institutional owners to acquire existing assets, with developers and institutional owners increasingly focusing on real estate fundamentals. Flight to quality is once again becoming a crucial factor, with varying focus on site plan functionality, building features, geographic location, and other aspects that are subject to close examination. Market knowledge and data have become crucial for brokers assisting owners in navigating these times.

The conference highlighted the shift towards Build-to-Suit (BTS) versus speculative (spec) development. Conference attendees heard from several developers, including CRG, Prologis, Pannatoni and Link Logistics.  Their outlook for 2025-2026 is very positive, while breaking ground on any new projects by yearend will be very strategic for each.

Economic Insights and Major Shifts

Economic insights provided by Craig Hurvitz indicated a bright outlook, with consumer spending steady compared to last year. Although the industrial supply and tenant demand are currently imbalanced, they are expected to rebalance by the end of 2024. Industrial rents, despite recent drops, have increased by 55% since 2020, though vacancies for big box spaces are rising.

Bret Swango discussed the impact of higher inflation than indicated by CPI and noted that CEOs are optimistic about 2024 and 2025. He highlighted several major shifts impacting real estate, including persistent high interest rates, the AI revolution, demographic shifts, the green transition, deglobalization, and a widening wealth gap. A significant number of CEOs expect to have their operations fully reshored within the next three years.

Transportation and Logistics

The state of transportation and its impact on industrial real estate was another key topic. While shipping volumes have dropped from their peaks, the situation isn’t as dire as perceived, with 2026 volume expected to match 2020 levels. Global shipping volumes are projected to increase significantly in the next 18+ months, with a gradual increase anticipated through 2026.

The rise of nearshoring, particularly in Mexico, is transforming the supply chain landscape. Innovation, regulation, and workforce dynamics will shape the future of logistics, with electric trucking and AI being key areas to watch.

Despite the challenges, the sentiment towards electric trucking is positive, though widespread implementation is still some distance away. AI is transforming real estate by freeing up time and providing advanced analytical capabilities, necessitating brokers to adapt and leverage these new tools.

Looking Ahead

The 2024 Colliers Supply Chain Conference highlighted 2024 as a transition year for occupiers and developers alike, with optimism for the future despite current challenges. Key trends include a focus on real estate fundamentals, strategic development approaches, and significant technological advancements in AI and logistics.

The evolving geopolitical landscape and macroeconomic shifts are driving nearshoring and reshoring trends, particularly positioning Mexico as a gateway for product volume into North America. Overall, the industrial market is expected to stabilize and grow, presenting significant opportunities for industry players.