New economy assets to drive rental growth in the industrial property market

This property type is poised to grow by 2% to 3% in 2023.

Prime logistics, warehouses and city-fringe business parks --- also known as new economy assets --  are expected to fuel rental growth in the industrial property market in 2023.

In 2023, Cushman & Wakefield expects performance across industrial property types to be divergent and new economy assets will likely outperform due to tight supply conditions and resilient long-term demand from e-commerce, life science and technology. 

Conventional factories and outlying business parks, on the other hand, are expected to see slower growth of up to 1.0% in 2023, given a higher supply pipeline. 

“Nonetheless, performance will bifurcate, as newer, higher spec buildings outperform older stock,” C&W commented.

Meanwhile, C&W also reported that the new industrial supply rose in 2022 due to construction delays accrued during the pandemic. Some new supplies were pushed back to 2023, especially in single-user factory and warehouse markets. 

“While supply in single-user factory space will increase significantly in 2023 and 2024, most of it is pre-committed by occupiers, so actual new supply into the market would be limited,” C&W said.

“New industrial supply may remain tempered as developers face higher construction costs, market uncertainty and strict JTC regulations,” the property expert added.