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Markets Calm but Trepidation Runs High

Overview: Fears that the Israel-Hamas war was going
to widen this past weekend sent gold and oil sharply higher at the end of last
week. A reportedly…



Overview: Fears that the Israel-Hamas war was going to widen this past weekend sent gold and oil sharply higher at the end of last week. A reportedly more restrained Israeli entrance into Gaza has seen gold pullback back below $2000 (~-0.6%) and December WTI soften (~-1.7%). The US dollar is mostly softer. Stronger-than-expected Australian retail sales fan the risk of a hike next week and this appears to be helping the Australian dollar lead the advancing G10 currencies. The greenback also remains below JPY150. Most emerging market currencies are off to a firm start.

Outside of Japan and Australia, Asia Pacific equity markets are mostly higher. The MSCI Asia Pacific Index fell by about 0.5% last week after dropping 2.7% the previous week. Europe's Stoxx 600 is beginning the week on a firm note, with a 0.75% gain. If sustained, it would be the most in nearly three weeks. It fell nearly 1% last week. US index futures are trading higher. The S&P 500 and NASDAQ fell by a little more than 2.5% last week. Meanwhile, ahead of tomorrow BOJ decision, the 10-year JGB yield edged up to a new high, a little above 0.88%. European yields are mostly 3-4 bp lower, though Italy's 10-year yield is off nearly seven basis points. The 10-year US Treasury yield is up almost three basis points to slightly above 4.86%. A few hours before the FOMC meeting concludes on Wednesday, Treasury will announce its Q4 funding plans, and the issue seems to be where the marginal new supply is focused bills or coupons. 

Asia Pacific

Australia's retail sales rose by 0.9% in September, well above the 0.3% median projection of Bloomberg 's survey. July and August were revised slightly higher. This is a nominal number, which means it is picking up an increase in prices. In real terms, Australia's retail sales do not appear as strong. The official estimate is due on November 3. That said, after the slightly firmer-than-expected Q3 CPI report last week, the market sees an increased chance that the Reserve Bank will hike rates again. The futures market now has a little more than a 50% chance of a hike next week, roughly double the odds seen before the inflation report. There is also a little more than a 75% chance of a hike discounted before the end of the year.

China reports its October PMI tomorrow. The median forecasts in the Bloomberg survey do not expect much change. We suspect the risk is on the upside as the formal and informal efforts by Beijing begin to find more traction. While structural challenges, like the property market, are still disrupting activity, the extent of non-market forces and relationships may not be fully appreciated. Moreover, new fiscal measures have been announced and may take some time to be implemented, but the signaling may be powerful in its own right. The National Financial Work Conference is taking place today and tomorrow, and new measures to address the property sector and local government risks are seen likely.

Japan's September employment report, retail sales, and industrial output figures will be reported tomorrow. Firm data is expected. The unemployment rate is seen slipping to 2.6% from 2.7%, retail sales may match the upwardly revised 0.2% August gain, and industrial production is expected to bounce back after declining by 0.7% in August and 1.8% in July. The focus though, is on the outcome of the BOJ meeting. Speculation that it may move could have been behind the short squeeze that lifted the yen ahead of the weekend. There are many moving parts of the extraordinary monetary policy, including the easing bias, the band of the 10-year JGB and its center point, and the negative policy rate. A poor reception to the two-year note sale (lowest bid-cover in more than a decade, but still more 3.0x) seems to reflect an appreciation that policy is changing. Also, the forecasts should be understood not simply a technocratic function but as a communication tool. Will the BOJ signal greater confidence that 2% inflation is sustainable by lifting its forecasts? 

Position-squaring appeared to knock the dollar lower ahead of the weekend after the stronger than expected Tokyo CPI strengthened speculation of a change in BOJ policy this week. After falling to about JPY149.45 before the weekend, the dollar's losses have been extended to JPY149.30 today. It has remained below JPY149.85. The 20-day moving average is close to JPY149.50, and the dollar has not settled low since late July. Nearly $1.4 bln of options struck there expire today. Tomorrow sees the expiration of nearly $1.1 bln options at JPY150.00. For a most of October, the Australian dollar has chopped back and forth between a little below $0.6300 to a little above $0.6400. It did record a marginal new low for the year last week near $0.6270 but quickly returned to its well-worn range. The Aussie is the strongest of the G10 currencies, rising almost 0.5% today to return to the pre-weekend high, around $0.6370. The Chinese yuan is flattish, trading within narrow pre-weekend range (~CNY7.3145-CNY7.3185). Note that the dollar has settled in a six-tick range in the last three sessions (CNY7.3168-CNY7.3174). The PBOC set the dollar's reference rate at CNY7.1781, while the average in projection in the Bloomberg survey was for CNY7.3169.


Below the surface, the balance of risks is changing in the eurozone, and it will be driven home by this week's highlights:  Q3 GDP and October's preliminary CPI. They will be reported tomorrow. It will not be surprising to see a dramatic slowing in CPI as last October's 1.5% gain drops out of the 12-month comparison. The question is how close the year-over-year rate approaches 3.0% (from 4.3% in September and 9.2% at the end of 2022). The core rate is expected to slow more moderately to 4.2% (from 4.5% in September and the 5.7% peak set in March). Of course, no one is declaring victory, but prices are moving in the right direction. Six German states have reported October CPI and not reported a monthly increase. The national figures will be released shortly. 

Growth is more problematic. Spain reported Q3 GDP expanded by 0.3%, slightly better than expected. That is where the good news ends. Earlier today, German reported a 0.1% contraction. This followed an upward revision Q2 GDP to 0.1% from flat. France and Italy report tomorrow. France may have stagnated, and there may be downside risks to the median forecast in Bloomberg's survey of 0.1% growth. 

The news stream from the eurozone is uninspiring, and the euro languishes in its trough as it consolidates after falling for 11 consecutive weeks into early October. After being turned back from the month's high set in the middle of last week (~$1.0695), the euro has chopped between roughly $1.0525 and $1.0605. It is trading inside the pre-weekend range (~$1.0535-$1.0595). Sterling's pattern in similar. It peaked in last Wednesday, though a little shy of the month's high (~$1.2290 vs. $1.2335) and has consolidated in a cent-range below $1.2175. So far, today's range is roughly from $1.2090 to almost $1.2140. Initial resistance is seen near $1.2155. The Bank of England meets Thursday, and while no change in policy is expected, and recent data warn of that growth forecasts may be cut.


The rise one-year inflation expectations in the University of Michigan's consumer confidence survey from 3.2% in September to 3.8% preliminary estimate and to 4.2% final reading was reported ahead of the weekend. It is especially important now as policymakers and investors try to understand the 100 bp jump in the US 10-year yield in the past two-and-a-half months. The University of Michigan also surveys 5-10-year inflation expectations. They rose to 3.0% from 2.8% in September. It is unchanged from the end of 2022 and up 0.1% from the end of 2021. The NY Fed's survey in September, published on October 10 (here), found a slight increase in the near-term outlook (one-year rose by 0.1% to 3.7%, and three-year expectations rose by 0.2% to 3.0%) but a small decline in the five-year expectation (-0.2% to 2.8%). There are market-based measures of inflation expectations, too. The 10-year breakeven (difference between the conventional and inflation-protected security) is near 2.40%. It was around 2.30% at the end of last year, which is also where the 200-day moving average is found. Another market-based measure of inflation expectations is the five-year five-year inflation swap (capturing the five-year inflation expectation starting in five years). It is near 2.75%, which is slightly elevated (the 200-day moving average is a little above 2.60%). The five-year-five-year inflation swap was closer to 2.50% at the end of last year.

The Canadian dollar fell to new lows for the year before the weekend. It rivaled the Swiss franc as the weakest of the G10 currencies. Exogenous factors like oil (rallied) and risk (US stocks fell) would seem to pull in opposite directions. One of the considerations may be shift in Bank of Canada expectations. The swaps market is discounting around an 85% chance of a cut by early Q3 24. A week ago, the probability was about 33%. Over the past two weeks, Canada's two-year yield has fallen a little more than 25 bp. The US dollar reached CAD1.3880 at the end of last week. There is little on the charts to prevent a run at last year's high near CAD1.3975. The note of caution from technicals is that the greenback settled above the upper Bollinger Band (~CAD1.3870). Initial support is seen near CAD1.3800. A wider-than-expected October traded deficit did not stop Mexican from reaching a seven-day high ahead of the weekend. The dollar fell to MXN18.00 to dip below the 20-day moving average (~MXN18.0950) for the first time in a month. However, the greenback recovered back above MXN18.10 in late dealing before the weekend. It has come back offered today and is near the pre-weekend lows. The dollar recovered more dramatically against the Brazilian real. The dollar initially fell to almost BRL4.93, the lowest level since September 22, and then surged to session highs near BRL5.0150. Brazil's central bank is expected to deliver a 50 bp cut in the Selic rate a few hours after the FOMC meeting concludes on Wednesday.  


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Riley Gaines Explains How Women’s Sports Are Rigged To Promote The Trans Agenda

Riley Gaines Explains How Women’s Sports Are Rigged To Promote The Trans Agenda

Is there a light forming when it comes to the long, dark and…



Riley Gaines Explains How Women's Sports Are Rigged To Promote The Trans Agenda

Is there a light forming when it comes to the long, dark and bewildering tunnel of social justice cultism?  Global events have been so frenetic that many people might not remember, but only a couple years ago Big Tech companies and numerous governments were openly aligned in favor of mass censorship.  Not just to prevent the public from investigating the facts surrounding the pandemic farce, but to silence anyone questioning the validity of woke concepts like trans ideology. 

From 2020-2022 was the closest the west has come in a long time to a complete erasure of freedom of speech.  Even today there are still countries and Europe and places like Canada or Australia that are charging forward with draconian speech laws.  The phrase "radical speech" is starting to circulate within pro-censorship circles in reference to any platform where people are allowed to talk critically.  What is radical speech?  Basically, it's any discussion that runs contrary to the beliefs of the political left.

Open hatred of moderate or conservative ideals is perfectly acceptable, but don't ever shine a negative light on woke activism, or you might be a terrorist.

Riley Gaines has experienced this double standard first hand.  She was even assaulted and taken hostage at an event in 2023 at San Francisco State University when leftists protester tried to trap her in a room and demanded she "pay them to let her go."  Campus police allegedly witnessed the incident but charges were never filed and surveillance footage from the college was never released.  

It's probably the last thing a champion female swimmer ever expects, but her head-on collision with the trans movement and the institutional conspiracy to push it on the public forced her to become a counter-culture voice of reason rather than just an athlete.

For years the independent media argued that no matter how much we expose the insanity of men posing as women to compete and dominate women's sports, nothing will really change until the real female athletes speak up and fight back.  Riley Gaines and those like her represent that necessary rebellion and a desperately needed return to common sense and reason.

In a recent interview on the Joe Rogan Podcast, Gaines related some interesting information on the inner workings of the NCAA and the subversive schemes surrounding trans athletes.  Not only were women participants essentially strong-armed by colleges and officials into quietly going along with the program, there was also a concerted propaganda effort.  Competition ceremonies were rigged as vehicles for promoting trans athletes over everyone else. 

The bottom line?  The competitions didn't matter.  The real women and their achievements didn't matter.  The only thing that mattered to officials were the photo ops; dudes pretending to be chicks posing with awards for the gushing corporate media.  The agenda took precedence.

Lia Thomas, formerly known as William Thomas, was more than an activist invading female sports, he was also apparently a science project fostered and protected by the athletic establishment.  It's important to understand that the political left does not care about female athletes.  They do not care about women's sports.  They don't care about the integrity of the environments they co-opt.  Their only goal is to identify viable platforms with social impact and take control of them.  Women's sports are seen as a vehicle for public indoctrination, nothing more.

The reasons why they covet women's sports are varied, but a primary motive is the desire to assert the fallacy that men and women are "the same" psychologically as well as physically.  They want the deconstruction of biological sex and identity as nothing more than "social constructs" subject to personal preference.  If they can destroy what it means to be a man or a woman, they can destroy the very foundations of relationships, families and even procreation.  

For now it seems as though the trans agenda is hitting a wall with much of the public aware of it and less afraid to criticize it.  Social media companies might be able to silence some people, but they can't silence everyone.  However, there is still a significant threat as the movement continues to target children through the public education system and women's sports are not out of the woods yet.   

The ultimate solution is for women athletes around the world to organize and widely refuse to participate in any competitions in which biological men are allowed.  The only way to save women's sports is for women to be willing to end them, at least until institutions that put doctrine ahead of logic are made irrelevant.          

Tyler Durden Wed, 03/13/2024 - 17:20

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Congress’ failure so far to deliver on promise of tens of billions in new research spending threatens America’s long-term economic competitiveness

A deal that avoided a shutdown also slashed spending for the National Science Foundation, putting it billions below a congressional target intended to…



Science is again on the chopping block on Capitol Hill. AP Photo/Sait Serkan Gurbuz

Federal spending on fundamental scientific research is pivotal to America’s long-term economic competitiveness and growth. But less than two years after agreeing the U.S. needed to invest tens of billions of dollars more in basic research than it had been, Congress is already seriously scaling back its plans.

A package of funding bills recently passed by Congress and signed by President Joe Biden on March 9, 2024, cuts the current fiscal year budget for the National Science Foundation, America’s premier basic science research agency, by over 8% relative to last year. That puts the NSF’s current allocation US$6.6 billion below targets Congress set in 2022.

And the president’s budget blueprint for the next fiscal year, released on March 11, doesn’t look much better. Even assuming his request for the NSF is fully funded, it would still, based on my calculations, leave the agency a total of $15 billion behind the plan Congress laid out to help the U.S. keep up with countries such as China that are rapidly increasing their science budgets.

I am a sociologist who studies how research universities contribute to the public good. I’m also the executive director of the Institute for Research on Innovation and Science, a national university consortium whose members share data that helps us understand, explain and work to amplify those benefits.

Our data shows how underfunding basic research, especially in high-priority areas, poses a real threat to the United States’ role as a leader in critical technology areas, forestalls innovation and makes it harder to recruit the skilled workers that high-tech companies need to succeed.

A promised investment

Less than two years ago, in August 2022, university researchers like me had reason to celebrate.

Congress had just passed the bipartisan CHIPS and Science Act. The science part of the law promised one of the biggest federal investments in the National Science Foundation in its 74-year history.

The CHIPS act authorized US$81 billion for the agency, promised to double its budget by 2027 and directed it to “address societal, national, and geostrategic challenges for the benefit of all Americans” by investing in research.

But there was one very big snag. The money still has to be appropriated by Congress every year. Lawmakers haven’t been good at doing that recently. As lawmakers struggle to keep the lights on, fundamental research is quickly becoming a casualty of political dysfunction.

Research’s critical impact

That’s bad because fundamental research matters in more ways than you might expect.

For instance, the basic discoveries that made the COVID-19 vaccine possible stretch back to the early 1960s. Such research investments contribute to the health, wealth and well-being of society, support jobs and regional economies and are vital to the U.S. economy and national security.

Lagging research investment will hurt U.S. leadership in critical technologies such as artificial intelligence, advanced communications, clean energy and biotechnology. Less support means less new research work gets done, fewer new researchers are trained and important new discoveries are made elsewhere.

But disrupting federal research funding also directly affects people’s jobs, lives and the economy.

Businesses nationwide thrive by selling the goods and services – everything from pipettes and biological specimens to notebooks and plane tickets – that are necessary for research. Those vendors include high-tech startups, manufacturers, contractors and even Main Street businesses like your local hardware store. They employ your neighbors and friends and contribute to the economic health of your hometown and the nation.

Nearly a third of the $10 billion in federal research funds that 26 of the universities in our consortium used in 2022 directly supported U.S. employers, including:

  • A Detroit welding shop that sells gases many labs use in experiments funded by the National Institutes of Health, National Science Foundation, Department of Defense and Department of Energy.

  • A Dallas-based construction company that is building an advanced vaccine and drug development facility paid for by the Department of Health and Human Services.

  • More than a dozen Utah businesses, including surveyors, engineers and construction and trucking companies, working on a Department of Energy project to develop breakthroughs in geothermal energy.

When Congress shortchanges basic research, it also damages businesses like these and people you might not usually associate with academic science and engineering. Construction and manufacturing companies earn more than $2 billion each year from federally funded research done by our consortium’s members.

A lag or cut in federal research funding would harm U.S. competitiveness in critical advanced technologies such as artificial intelligence and robotics. Hispanolistic/E+ via Getty Images

Jobs and innovation

Disrupting or decreasing research funding also slows the flow of STEM – science, technology, engineering and math – talent from universities to American businesses. Highly trained people are essential to corporate innovation and to U.S. leadership in key fields, such as AI, where companies depend on hiring to secure research expertise.

In 2022, federal research grants paid wages for about 122,500 people at universities that shared data with my institute. More than half of them were students or trainees. Our data shows that they go on to many types of jobs but are particularly important for leading tech companies such as Google, Amazon, Apple, Facebook and Intel.

That same data lets me estimate that over 300,000 people who worked at U.S. universities in 2022 were paid by federal research funds. Threats to federal research investments put academic jobs at risk. They also hurt private sector innovation because even the most successful companies need to hire people with expert research skills. Most people learn those skills by working on university research projects, and most of those projects are federally funded.

High stakes

If Congress doesn’t move to fund fundamental science research to meet CHIPS and Science Act targets – and make up for the $11.6 billion it’s already behind schedule – the long-term consequences for American competitiveness could be serious.

Over time, companies would see fewer skilled job candidates, and academic and corporate researchers would produce fewer discoveries. Fewer high-tech startups would mean slower economic growth. America would become less competitive in the age of AI. This would turn one of the fears that led lawmakers to pass the CHIPS and Science Act into a reality.

Ultimately, it’s up to lawmakers to decide whether to fulfill their promise to invest more in the research that supports jobs across the economy and in American innovation, competitiveness and economic growth. So far, that promise is looking pretty fragile.

This is an updated version of an article originally published on Jan. 16, 2024.

Jason Owen-Smith receives research support from the National Science Foundation, the National Institutes of Health, the Alfred P. Sloan Foundation and Wellcome Leap.

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What’s Driving Industrial Development in the Southwest U.S.

The post-COVID-19 pandemic pipeline, supply imbalances, investment and construction challenges: these are just a few of the topics address by a powerhouse…



The post-COVID-19 pandemic pipeline, supply imbalances, investment and construction challenges: these are just a few of the topics address by a powerhouse panel of executives in industrial real estate this week at NAIOP’s I.CON West in Long Beach, California. Led by Dawn McCombs, principal and Denver lead industrial specialist for Avison Young, the panel tackled some of the biggest issues facing the sector in the Western U.S. 

Starting with the pandemic in 2020 and continuing through 2022, McCombs said, the industrial sector experienced a huge surge in demand, resulting in historic vacancies, rent growth and record deliveries. Operating fundamentals began to normalize in 2023 and construction starts declined, certainly impacting vacancy and absorption moving forward.  

“Development starts dropped by 65% year-over-year across the U.S. last year. In Q4, we were down 25% from pre-COVID norms,” began Megan Creecy-Herman, president, U.S. West Region, Prologis, noting that all of that is setting us up to see an improvement of fundamentals in the market. “U.S. vacancy ended 2023 at about 5%, which is very healthy.” 

Vacancies are expected to grow in Q1 and Q2, peaking mid-year at around 7%. Creecy-Herman expects to see an increase in absorption as customers begin to have confidence in the economy, and everyone gets some certainty on what the Fed does with interest rates. 

“It’s an interesting dynamic to see such a great increase in rents, which have almost doubled in some markets,” said Reon Roski, CEO, Majestic Realty Co. “It’s healthy to see a slowing down… before [rents] go back up.” 

Pre-pandemic, a lot of markets were used to 4-5% vacancy, said Brooke Birtcher Gustafson, fifth-generation president of Birtcher Development. “Everyone was a little tepid about where things are headed with a mediocre outlook for 2024, but much of this is normalizing in the Southwest markets.”  

McCombs asked the panel where their companies found themselves in the construction pipeline when the Fed raised rates in 2022.   

In Salt Lake City, said Angela Eldredge, chief operations officer at Price Real Estate, there is a typical 12-18-month lead time on construction materials. “As rates started to rise in 2022, lots of permits had already been pulled and construction starts were beginning, so those project deliveries were in fall 2023. [The slowdown] was good for our market because it kept rates high, vacancies lower and helped normalize the market to a healthy pace.” 

A supply imbalance can stress any market, and Gustafson joked that the current imbalance reminded her of a favorite quote from the movie Super Troopers: “Desperation is a stinky cologne.” “We’re all still a little crazed where this imbalance has put us, but for the patient investor and owner, there will be a rebalancing and opportunity for the good quality real estate to pass the sniff test,” she said.  

At Bircher, Gustafson said that mid-pandemic, there were predictions that one billion square feet of new product would be required to meet tenant demand, e-commerce growth and safety stock. That transition opened a great opportunity for investors to run at the goal. “In California, the entitlement process is lengthy, around 24-36 months to get from the start of an acquisition to the completion of a building,” she said. Fast forward to 2023-2024, a lot of what is being delivered in 2024 is the result of that chase.  

“Being an optimistic developer, there is good news. The supply imbalance helped normalize what was an unsustainable surge in rents and land values,” she said. “It allowed corporate heads of real estate to proactively evaluate growth opportunities, opened the door for contrarian investors to land bank as values drop, and provided tenants with options as there is more product. Investment goals and strategies have shifted, and that’s created opportunity for buyers.” 

“Developers only know how to run and develop as much as we can,” said Roski. “There are certain times in cycles that we are forced to slow down, which is a good thing. In the last few years, Majestic has delivered 12-14 million square feet, and this year we are developing 6-8 million square feet. It’s all part of the cycle.”  

Creecy-Herman noted that compared to the other asset classes and opportunities out there, including office and multifamily, industrial remains much more attractive for investment. “That was absolutely one of the things that underpinned the amount of investment we saw in a relatively short time period,” she said.  

Market rent growth across Los Angeles, Inland Empire and Orange County moved up more than 100% in a 24-month period. That created opportunities for landlords to flexible as they’re filling up their buildings. “Normalizing can be uncomfortable especially after that kind of historic high, but at the same time it’s setting us up for strong years ahead,” she said. 

Issues that owners and landlords are facing with not as much movement in the market is driving a change in strategy, noted Gustafson. “Comps are all over the place,” she said. “You have to dive deep into every single deal that is done to understand it and how investment strategies are changing.” 

Tenants experienced a variety of challenges in the pandemic years, from supply chain to labor shortages on the negative side, to increased demand for products on the positive, McCombs noted.  

“Prologis has about 6,700 customers around the world, from small to large, and the universal lesson [from the pandemic] is taking a more conservative posture on inventories,” Creecy-Herman said. “Customers are beefing up inventories, and that conservatism in the supply chain is a lesson learned that’s going to stick with us for a long time.” She noted that the company has plenty of clients who want to take more space but are waiting on more certainty from the broader economy.  

“E-commerce grew by 8% last year, and we think that’s going to accelerate to 10% this year. This is still less than 25% of all retail sales, so the acceleration we’re going to see in e-commerce… is going to drive the business forward for a long time,” she said. 

Roski noted that customers continually re-evaluate their warehouse locations, expanding during the pandemic and now consolidating but staying within one delivery day of vast consumer bases.  

“This is a generational change,” said Creecy-Herman. “Millions of young consumers have one-day delivery as a baseline for their shopping experience. Think of what this means for our business long term to help our customers meet these expectations.” 

McCombs asked the panelists what kind of leasing activity they are experiencing as a return to normalcy is expected in 2024. 

“During the pandemic, shifts in the ports and supply chain created a build up along the Mexican border,” said Roski, noting border towns’ importance to increased manufacturing in Mexico. A shift of populations out of California and into Arizona, Nevada, Texas and Florida have resulted in an expansion of warehouses in those markets. 

Eldridge said that Salt Lake City’s “sweet spot” is 100-200 million square feet, noting that the market is best described as a mid-box distribution hub that is close to California and Midwest markets. “Our location opens up the entire U.S. to our market, and it’s continuing to grow,” she said.   

The recent supply chain and West Coast port clogs prompted significant investment in nearshoring and port improvements. “Ports are always changing,” said Roski, listing a looming strike at East Coast ports, challenges with pirates in the Suez Canal, and water issues in the Panama Canal. “Companies used to fix on one port and that’s where they’d bring in their imports, but now see they need to be [bring product] in a couple of places.” 

“Laredo, [Texas,] is one of the largest ports in the U.S., and there’s no water. It’s trucks coming across the border. Companies have learned to be nimble and not focused on one area,” she said. 

“All of the markets in the southwest are becoming more interconnected and interdependent than they were previously,” Creecy-Herman said. “In Southern California, there are 10 markets within 500 miles with over 25 million consumers who spend, on average, 10% more than typical U.S. consumers.” Combined with the port complex, those fundamentals aren’t changing. Creecy-Herman noted that it’s less of a California exodus than it is a complementary strategy where customers are taking space in other markets as they grow. In the last 10 years, she noted there has been significant maturation of markets such as Las Vegas and Phoenix. As they’ve become more diversified, customers want to have a presence there. 

In the last decade, Gustafson said, the consumer base has shifted. Tenants continue to change strategies to adapt, such as hub-and-spoke approaches.  From an investment perspective, she said that strategies change weekly in response to market dynamics that are unprecedented.  

McCombs said that construction challenges and utility constraints have been compounded by increased demand for water and power. 

“Those are big issues from the beginning when we’re deciding on whether to buy the dirt, and another decision during construction,” Roski said. “In some markets, we order transformers more than a year before they are needed. Otherwise, the time comes [to use them] and we can’t get them. It’s a new dynamic of how leases are structured because it’s something that’s out of our control.” She noted that it’s becoming a bigger issue with electrification of cars, trucks and real estate, and the U.S. power grid is not prepared to handle it.  

Salt Lake City’s land constraints play a role in site selection, said Eldridge. “Land values of areas near water are skyrocketing.” 

The panelists agreed that a favorable outlook is ahead for 2024, and today’s rebalancing will drive a healthy industry in the future as demand and rates return to normalized levels, creating opportunities for investors, developers and tenants.  

This post is brought to you by JLL, the social media and conference blog sponsor of NAIOP’s I.CON West 2024. Learn more about JLL at or

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