Logistical shocks push industrial companies toward ‘durable’ real estate

Article originally posted on Phoenix Business Journal on May 1, 2026

Recent years have brought repeated turbulence for the nation’s industrial real estate sector.

To start the decade, the pandemic constricted global supply chains. The introduction of tariffs at the start of last year once again scrambled that picture. More recently, the war with Iran has driven fuel prices higher, creating another drag on the traditional means of moving goods into U.S. warehouses and factories.

Those three major disruptions — combined with others less ingrained in the nation’s cultural consciousness — are prompting a change in the way companies think about their industrial real estate footprint. Namely, the shift is driving up the value of real estate that offers resiliency against those kinds of shocks, according to a report by commercial real estate advisory firm Newmark Group Inc.

“The past five years saw industrial development exploding everywhere,” said Lisa Denight, Newmark managing director and head of North American industrial research for the firm. “The pipeline was so expansionary, so broadly. Now we’re in a position where we really need to retrench and think about what parts of those expansionary moments were durable and which were not.”

What makes a durable market?

Newmark’s report ranked several major industrial real estate markets using an index that combines several factors to determine which would be most durable in the face of future supply chain shocks. Those factors include proximity to consumption, particularly as it relates to e-commerce, as well as logistical connections, especially rail and intermodal freight. The report also considered the quality of existing and under-construction industrial real estate and the ability of the assessed regions to compete for manufacturing projects.

The most durable market, according to the report, is the New York City metro, primarily on the strength of its consumer base — though it also scored well for manufacturing and logistics. Other markets in the top 10 include Chicago, Houston, eastern Pennsylvania and Louisville, Kentucky.

The markets that ranked high in the index in general have enjoyed better absorption rates and higher rent growth. They were the markets, according to the report, that have been able to retain tenants even when business got tough.

And there’s inertia to those markets, said Jamil Harkness, a senior research analyst working on national industrial projects at Newmark with Denight.

Industrial occupiers have been drawn to markets like Phoenix, for instance, building out manufacturing capacity and expanding logistical networks, making them more appealing to new entrants, Harkness said.

“Those markets actually become more strategically important to everybody else, who then gravitate into that ecosystem,” he said. “No one wants to be out someplace by themselves.”

How buildings are changing

Industrial real estate investors have operated for decades on what Adam Faulk, vice chairman of Newmark’s Dallas office, calls the “democratized investment thesis.”