The industrial asset class has been on a tear since well before the pandemic began, and the sector has seen enormous growth since 2020, when more customers than ever before began shopping online. 

But eye-popping pricing and deal flow will likely be tested by the recent increases in interest rates and financing costs. Since the beginning of the year, the 10-year Treasury rate has ticked up by 150 basis points, and the Fed has indicated that a series of additional interest rate hikes are on the horizon for 2022.

"Debt coupons have increased correspondingly, reducing the premium between mortgage coupons and industrial acquisition yields," CommercialEdge analysts note in a new report. "Because demand for industrial is so robust, and rents are expected to keep increasing, investors have been paying high prices. Deal flow could moderate if banks become more conservative and reduce leverage or if buyers demand higher yields