Industrial continues to be one of the best-performing sectors within the real asset class. After two years of unprecedented positive net absorption levels, tenant leasing activity is returning to more typical levels — which we don’t think should surprise any market participant. We believe the tenant demand of the last couple of years was simply unsustainable. Despite the noise about a recession or corporate pullback — which still very well could happen — 2023 net absorption is on pace to reach the third-best net absorption year on record, lagging only the record-setting years of 2021 and 2022.

Even though industrial property fundamentals remain resilient in many submarkets, capital market headwinds are reducing property valuations. The Federal Reserve’s policy shift from accommodative monetary policy to restrictive monetary policy is creating a higher cap rate environment for all asset classes, including industrial. Again, this shouldn’t be a surprise to any real