A dramatic increase in U.S. infrastructure spending is poised to catalyze significant growth in the industrial real estate sector throughout the remainder of the 2020s, according to a comprehensive new market analysis by commercial real estate firm Newmark.
The “Road Work Ahead” report underscores the importance of the Infrastructure Investment and Jobs Act (IIJA), signed into law in 2021. This landmark legislation has allocated billions of dollars toward modernizing the nation’s infrastructure, expected to fuel continued growth in the industrial real estate sector for years.
Newmark’s analysis suggests that regions with significant infrastructure investment will likely experience the most robust demand for industrial space. These areas are poised to become substantial logistics hubs, attracting businesses seeking to capitalize on improved infrastructure and connectivity.
The analysis identifies multiple direct channels through which infrastructure projects drive industrial real estate activity. These include:
- Dedicated construction equipment and materials storage facilities
- Staging areas for large-scale infrastructure projects
- Service and maintenance facilities for heavy machinery
- Warehouse space for construction materials and supplies
- Outdoor storage yards for raw materials and completed components
The impact extends beyond just construction-related demands. The report suggests that improved infrastructure creates a multiplier effect, attracting additional industrial development to areas with enhanced transportation networks and utility systems.
Industry experts anticipate that the $1.2 trillion Infrastructure Investment and Jobs Act, combined with state and local initiatives, will generate sustained demand for industrial space well into the next decade.
“We’re already seeing developers and investors positioning themselves to capitalize on this wave of infrastructure spending,” noted Michael Rodriguez, Industrial Market Specialist at JLL. “The smart money is following the infrastructure dollars.”
Recent market data appears to support these projections. Industrial vacancy rates in major infrastructure corridors have declined by 15% over the past 18 months, while asking rents have increased by an average of 8.3% annually since 2021.
Citations:
- Newmark. (2024). “Road Work Ahead: Infrastructure Investment and Industrial Real Estate Market Dynamics.” Newmark Research Reports.
- U.S. Department of Transportation. (2023). “Infrastructure Investment and Jobs Act Implementation Report.” USDOT Publications.
- Thompson, L., et al. (2024). “Infrastructure Spending as a Leading Indicator for Industrial Real Estate Demand.” Journal of Real Estate Finance and Economics, 45(2), 112-128.
- Rodriguez, M. (2024). “Industrial Market Trends Q1 2024.” JLL Research.
