TAG Industrial Watch: May 20, 2023

Despite the bickering between Congressional Republicans and President Biden, the debt ceiling will most likely be raised just in time like the previous 100-plus times since the limit was enacted during WWI in 1917. Failure to do so would likely spark chaos on Wallstreet and probably prompt an immediate suspension or increase to the debt ceiling. However, the biggest threat to the nation, including commercial real estate owners, is not if we don’t raise the debt ceiling, but when we do.

The $31.4 trillion national debt is already unsustainable with the U.S. now paying more on interest payments than it spends on national defense. So, more debt will require even more monetary inflation by the Federal Reserve to ensure the government continues to “pay its bills.” With inflation already a problem, raising the debt ceiling is like pouring gasoline on a fire. For industrial real estate owners and investors, high inflation for the foreseeable future will fundamentally change how properties are bought and sold. For example, the days of conducting a sale-leaseback with only 2% rent escalations will come to an end. Instead, rent escalations tied to the Consumer Price Index will likely become the new standard as high inflation becomes the norm. Given that higher rents mean lower profits, owner-users that could benefit from a sale-leaseback should act sooner rather than later.

I N D U S T R I A L   N E W S

Republicans Walk Out Of Debt Ceiling Talks,
Say White House Isn’t Being ‘Reasonable’

CNBC – May 19, 2023
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Industrial And Office Both Slow, But For Very Different Reasons
Globe St. – May 15, 2023
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Industrial Real Estate Market’s New Demand
Driver Changing Space Requirements

Bisnow – March 16, 2023
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Green Manufacturing Sparks Industrial Real Estate Growth
The Motley Fool – May 17, 2023
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US Commercial Real Estate Post First Price Decline In A Decade
MPA – May 18, 2023
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R E G I O N A L   N E W S

Cooling Off The Red-Hot Industrial Market?
Credit Those Interest-Rate Hikes

REJournals – May 11, 2023
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2,000-Acre Industrial Project Moves Forward Near Austin
Commercial Property Executive – May 12, 2023
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Tesla Breaks Ground On Lithium Refinery In South Texas
CoStar – May 9, 2023
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Bed Bath & Beyond Bankruptcy: What It Means
For Industrial And Commercial Real Estate

MarketWatch – May 10, 2023
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Denver CRE Leaders Trade Record-Breaking
Central Connection Industrial Project

Mile High CRE – May 10, 2023
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