Industrial Demand Balances Out | Winter 2024

The Winter 2024 Forecast paints a mixed picture for the industrial sector over the next three years. Development activity remains strong, with 74% of Southern California panelists and 56% of Northern California respondents planning new projects in the next 12 months. At the same time, panelists expect supply to grow faster than demand, signaling that new development will eventually begin to cool.

Nearly half (49%) of respondents report e-commerce as the primary driver of new industrial development. The rising use of artificial intelligence (“AI”) and the corresponding demand for data center space is also beginning to influence new industrial development. Sixteen percent of Forecast respondents cite the AI boom and digital infrastructure as the primary driver of industrial development, ahead of cold storage and electric vehicle facilities.

“While industrial growth has slowed, the sector is expected to remain relatively healthy in the coming years with strong leasing activity and new construction,” said Drew Emmel, partner at Allen Matkins. “Emerging trends such as the commercialization of AI will drive demand in the industrial space, especially for facilities that meet the unique needs of digital infrastructure tenants.”

See more insights in the Winter 2024 Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Survey.