The industrial sector has been in flux for over half a decade.
Events ranging from pandemic-driven supply chain cracks to inflation to AI-driven investments to the Middle East conflict mean that “the U.S. industrial market has absorbed more disruption since 2020 than in the prior two decades combined,” according to a recent Newmark write-up: “ Shocks to the System: Market Durability Is the New Lens for U.S. Industrial Amid Permanent Volatility.”
As such, the investor question might be less about rent growth or occupancy and more about what markets and buildings are “best positioned for durable demand when the next shock hits,” the report said.
Enter Newmark’s “U.S. Industrial Market Durability Index,” which helps identify the more resilient industrial markets amid volatility.
“The last several years made it clear that not all industrial markets are equally equipped to absorb disruption,” Newmark’s Senior Research Analyst Jamil Harkness told Connect CRE. “We introduced it in this report as a practical way to make the idea of resiliency more measurable and more useful in a real estate context.”
By the Numbers
The following chart lists markets with high durability index scores:
(insert market durability top 10 chart)
The Newmark framework emphasizes proximity to consumption (and e-commerce fulfillment), modal optionality, concentration of modern supply and manufacturing competitiveness (labor availability and operating environments).
Harkness explained that the benefit to investors is an understanding of which markets remain relevant to tenants despite cost shocks, freight disruptions and supply chain shifts or redesigns.
“This is where durability becomes useful,” he added. “It helps separate markets with more resilient demand drivers from markets that may have looked just as attractive in a calmer period but are more exposed when conditions shift.”
He commented that the index isn’t a literal forecast but can be used as a relative positioning tool alongside other measurements.
Unpredictability: Here to Stay?
Harkess said that some of the more acute pressures that the industrial sector is currently experiencing could moderate over time. However, this doesn’t mean an automatic return to pre-pandemic days.
“I would still expect volatility to remain a more meaningful part of the operating backdrop than it used to be, even if conditions become more manageable,” he said.
As a result, resiliency can be just as important in driving performance as lease rolls, rent pro formas and absorption. Said Harkness: “The strongest markets aren’t just the ones that benefited from the last cycle, but the ones best-positioned to stay relevant through the next one.”
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