Blog

New Year’s Resolution: Be a Contrarian

In 2024, we advised our clients of the “wall” of warehouse space that was coming to market.  At the same time this “supply” of warehouse space was hitting the market, Corporate America was tapping the brakes on the leasing (“demand”) for new warehouse space.  As a result, vacancies for warehouse space — which had sunk to 3.8% for the U.S. Industrial/Logistics markets during the second quarter of 2022 — are now at 7.8% and will likely go even higher in 2025.  That said, this wall of newly constructed warehouse space will deliver to the market in 2025 and thereafter, very little new supply is in the pipeline.

During the 2025 calendar year, landlords of vacant buildings will be particularly motivated to lease their space and they are already aware that Tenants have the power in the negotiations.  It’s time for Tenants to be a “contrarian” in regard to the U.S. Industrial markets, and to begin (if you haven’t already) negotiating from a position of strength on renewals of existing leases, as well as on leases for new space.

It is also time for Tenants utilizing Third Party Warehousing providers as operators for their dedicated warehouses, to strongly consider holding the lease for these spaces instead.  If your company is already holding the lease for your dedicated warehouses, then congratulations! You and your company clearly understand the value proposition.

In short, if your company’s warehouse lease is expiring in 2025 or 2026, in most U.S. industrial markets you should be negotiating from a position of strength and aggressively negotiating more favorable rental terms than you likely experienced in prior years.

If your company is not currently holding the lease for its dedicated warehouse space, please reach out to us so that we can give you a detailed overview on the Benefits of Holding the Lease, and how doing so will save your company between 8% and 20% per year on your storage costs.

***