Warehouse Rent Tracker (Oct 2024)_ Waiting for Trump

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the Real Estate Investment Trusts (REITs) sector, particularly in the context of the U.S. market and its dynamics as of November 27, 2024 [8][39]. Core Insights and Arguments - Impact of Trump's Presidency: The incoming presidency has raised concerns about potential tariff increases and supply chain implications, leading tenants to adopt a "waiting for tariffs" strategy. This has resulted in elevated vacancies and moderating rents in the industrial sector [8]. - Onshoring/Nearshoring Trends: The report suggests that onshoring and nearshoring could accelerate under the new administration, with specific REITs like STAG, LXP, and EGP positioned to benefit from this trend [8]. - Market Rent Trends: - Southern California experienced a significant decline in rents, with a year-over-year decrease of -12.6% [9]. - Other markets such as Atlanta (+8.1% YoY), Dallas (+5.2% YoY), and Houston (+3.2% YoY) showed positive growth, indicating a divergence in market performance [9]. - Vacancy Rates and Rent Growth: The report highlights that many markets are experiencing negative rent growth, particularly in Los Angeles and Chicago, while others are benefiting from increased demand due to onshoring [9][10]. Important but Overlooked Content - Specific Market Performance: - Los Angeles: Rent growth down -12.6% YoY, with significant declines in sub-markets such as South East LA (-13.3% YoY) and San Gabriel Valley (-14.2% YoY) [63]. - Chicago: Slight decline of -2.0% YoY [9]. - Notable growth in Columbus (+22.5% YoY), San Diego (+14.7% YoY), and Austin (+14.9% YoY) suggests potential investment opportunities in these areas [9]. - REIT-Specific Insights: - LXP's markets saw a rent increase of +3.4% YoY, driven by Atlanta's strong performance [28]. - EGP's markets reported a +2.6% YoY increase, with expectations for continued growth in 2025 [28]. - STAG's markets experienced a +1.8% YoY growth, with management projecting cash spreads of +20-25% for 2025 [28]. - TRNO's markets saw a decline of -0.3% YoY, with management indicating a shift in focus from Southern California to Miami [28]. - PLD's markets reported a -4.2% YoY decline, primarily due to issues in Southern California [28]. Conclusion - The REIT sector is currently facing mixed performance across different markets, with significant challenges in Southern California contrasted by growth in other regions. The potential for onshoring and nearshoring presents opportunities for specific REITs, while broader economic factors, including tariffs and supply chain dynamics, will continue to influence market conditions moving forward.