Industrial Investments in Midwest Projected to Deliver Superior Returns
Industrial investments made at the end of 2017 should post returns of 180% over a 10-year investment horizon.
The Midwest is a prime location for prosperous industrial assets given its comparatively low cost-of-entry and stable, economically diverse industrial markets, according to a new report from Cushman & Wakefield.
Markets here are experiencing historic income growth over the last several years, generated by record low vacancy and substantial demand, according to David Hoebbel, Regional Research Director, Cushman & Wakefield, especially during times of economic uncertainty.
Industrial is providing a superior return over a 5-, 7- or 10-year horizon as these assets continue to outpace other traditional and alternative investment classes, according to the report.
“Industrial investments made at the end of 2017 are expected to post cumulative returns of as much as 180% over a 10-year investment horizon. This profile of outperformance is expected to be maintained in current vintages,” Rebecca Rockey, Deputy Chief Economist and Global Head of Forecasting, Cushman & Wakefield, tells GlobeSt.com,.
“Assuming forecasted demand and interest rate conditions come to bear, there exists a non-trivial opportunity to capture additional income return growth and relative price appreciation.”
Given the Midwest’s less construction, vacancy in the market is forecast to increase by 60 to 70 basis points (bps) below projections across other regions.
There’s plenty of “dry powder” – over $258B in North America as of year-end 2023 – that could come to the Midwest, according to the report. Battery and electric vehicle manufacturing are two strong potential industries that could land in the Midwest.