U.S. Industrial Real Estate Is Quietly Splitting Into Two Markets

America has always thought of itself as an industrial nation. For most of the last century that self-image was literal: the country made things, at scale, and the buildings where it made them defined entire regions. Then came a long stretch when the prevailing narrative said all of that was over. The nature of global trade meant that manufacturing had been outsourced for good and the only future was services and tech. The factory floor was a museum piece.

Industrial real estate never got the memo. Through the 2010s and into the pandemic boom, it was the best-performing major asset class in commercial real estate, throwing off the kind of returns that office and retail could only envy. To a casual observer, the strength of industrial property looked like proof that American industry was alive and well...

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RSK: I often thought the same. The industrial sector is actually composed of two parts.....warehousing, and manufacturing.