By Ashley Fahey – Editor, The National Observer: Real Estate Edition, The Business Journals
Suppliers who've flocked to places like the Austin, Texas, metro area are in a holding pattern as the semiconductor industry goes through a bit of a down period.
Lofty projects that were expected to debut this year are delayed, putting groups like parts makers in limbo as they wait for the facilities that drew them to the area to become operational.
"The only thing really keeping us alive is that we have a large customer base of different customers that are making different kinds of chips," Ulysses Schussler, a senior director at KoMiCo Technology Inc., told Justin Sayers at the Austin Business Journal.
Semiconductors have been a big target of massive federal investments, such as the CHIPS and Science Act passed in 2022.
Lots to watch in 2025 for industrial real estate
With the prospect of significant tariffs looming during President-elect Donald Trump's incoming administration, some industrial real estate-using groups are trying to plan ahead and stockpile goods from abroad that could become more expensive next year.
Meanwhile, as leasing activity stabilizes from the frenetic pace observed during the Covid-19 pandemic, some oversupplied markets are catching their breath.
There's a mixed — but overall optimistic — outlook for industrial real estate in 2025, although there are several levers that could influence the direction of the market.
One key factor: More than 27% of current industrial leases, as tracked by CompStak Inc., are expected to expire in 2025 and 2026. While some of those expirations may include short-term deals signed since the pandemic, others will be pre-2020 lease terms, Alie Baumann, director of real estate intelligence at CompStak, told me. In fact, according to the firm, the average rent among leases expiring in 2025 is 75.7% below current market rate.
Those lease renewals are coming at a time when industrial groups — much like their office counterparts — are prioritizing the newest, and even amenitized, warehouses for their industrial real estate. CBRE Group Inc. recently found industrial buildings built before 2000 accounted for more than 100 million square feet of negative absorption this year while properties built after 2022 saw more than 200 million square feet of positive absorption.
FULL STORY: Tariffs, lease expirations and flight-to-quality: Here's what to watch in the 2025 industrial market
Changes could be coming to federal eco-devo
Like many other things, economic-development coalitions and initiatives are facing an uncertain future with the change in White House administration next month.
Billions in grants, subsidies and other incentives have been passed as part of sweeping federal measures in recent years — among them, the Inflation Reduction Act, the CHIPS and Science Act, the Regional Technology and Innovation Hubs program, and the Infrastructure Investment and Jobs Act. Although passed during the administration of Democratic President Joe Biden, the efforts largely had bipartisan support.
Adding it up: A recent Brookings Institution report found, as of September, a little more than $40 billion in place-based funding authorizations have been allocated or awarded.
What changes might be coming to those programs from the federal government under President Donald Trump's second term is the big question.
"These big investments ... have stimulated a lot of excitement and creation of really important, more coherent [economic-development] strategies for places," Mark Muro, senior fellow at Brookings Metro, told me. "The election creates a new level of uncertainty around this."
Data-center needs rev up in core markets
There doesn't seem to be an end in sight to the nation's data-center boom, especially as artificial intelligence takes center stage and reliance on digital infrastructure continues to grow.
In fact, data-center development in Virginia — where much of the boom has occurred — is outpacing electric-power infrastructure and will likely lead to increased costs for non-data-center customers, according to a recent Joint Legislative Audit and Review Commission analysis, reports Dan Brendel at the Washington Business Journal.
In places like Virginia, legislators will have to weigh data centers' energy implications against their economic and fiscal benefits. Although not huge job generators, data centers tend to be big taxpayers. Loudoun County, Virginia, for example, gets about a third of its local tax revenue from data centers.
According to JLARC, data centers are currently paying their full cost of service, but growing energy demand is likely to increase other customers’ costs. A typical Dominion Energy Inc. customer could see their costs increase by an estimated $14 to $37 monthly by 2040, not accounting for inflation, according to the study.
Full story: https://tinyurl.com/4k49fzcd
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