Early optimism, built on moderating inflation, fiscal stimulus via the One Big Beautiful Bill Act (OBBBA), and ongoing generational AI-driven investment has been complicated by Middle Eastern conflict sending global energy markets into turmoil. The outlook now hinges on how long the pressure persists, with some forecasters recently raising the odds of a recession while lowering the likelihood of interest rate cuts, as outlined in a new report released by Newmark.
“Three major disruptions – the pandemic, the U.S. tariff regime, and now conflict-driven fuel price spikes – have repeatedly stressed U.S. supply chains and the industrial real estate market that serves them. And, that’s just three “big ones” in a continuum of many more. As shocks grow larger and more frequent, their cumulative weight is driving permanent shifts in how occupiers think about space, location, inventory and cost, reshaping strategy around a single organizing principle: resiliency,” the report says.
Newmark’s U.S. Industrial Market Durability Index identifies the markets with the strongest odds of resiliency when freight paths change, operating costs spike, or the next unknown materializes.
Key takeaways:
· Over the last five years, higher durability markets saw an annual average absorption rate of 2.4% compared to 2% for lower-scored markets, annual average rent growth of 7.9% vs. 4.4%, and average annual cap rates 30 basis points lower.
· Distance amplifies disruption: the more labyrinthine a supply chain, the more links available to break.
· Vacancy fell to historic lows, asking rents grew 30–40% or more year-over-year in key markets, and development surged to all-time highs. But the boom came with a cost. The same dynamics that made industrial real estate invaluable—intense demand, supply scarcity,
· Roughly half a trillion dollars in major U.S. manufacturing expansion was invested from 2020-2023. This shift also reinforced supply chain redundancy and diversification; a more cautious development risk tolerance; and higher-for-longer cost of capital expectations.
· Beginning in early 2025, U.S. tariff policy entered a state of near-continuous revision, averaging fewer than five days between policy changes throughout the year. Effective tariff rates rose to levels not seen since the early 20th Century. The result was less a collapse in demand than a paralysis in decision-making, although 2Q25 recorded the lowest absorption in more than a decade.
· Reshoring, friendshoring, and nearshoring production continued, with 2025 domestic investment in manufacturing reaching a three-year high. United States–Mexico–Canada Agreement (USMCA) -corridor markets like Dallas and Kansas City are increasingly favored as freight paths are rewritten and Mexico’s role at the center of U.S. trade flows becomes even more pronounced.
· For logistics occupiers, transportation is the single largest expense, comprising 60% of total business logistics costs, with fuel accounting for approximately 30% of that figure. Even a modest increase immediately erodes margin and makes the true cost of long, truck-dependent supply chains visible in the proft and loss statement (P&L).
· For investors, buildings that maximize efficiency and markets that promote resilience will continue to attract durable demand. Rent growth prospects are meaningfully higher in top-scoring durability markets than in lower-scoring ones. This does not mean every occupier needs to be in Dallas, Southern California or Chicago—many have operational reasons to be in markets that score lower on Newmark's index. But the traits that define higher-scoring markets are increasingly the ones occupiers prioritize when making location decisions. Investors can leverage these durable markets further by proactively partnering with occupiers, and their upstream and downstream partners to co-invest in scalable power infrastructure and modal solutions, unlocking growth for occupiers while continuing to raise investment value for the broader industrial ecosystem.
