Hanson Capital Weekly Newsletter #12– June 4–10: Market Moves & Investor Insights

Market Insight #1: Industrial Vacancy Rises Amid Speculative Supply Surge

The U.S. industrial market is seeing an increase in warehouse vacancies as speculative development continues to outpace current demand. According to CBRE, speculative supply additions—particularly in large distribution corridors—are softening occupancy metrics, with national vacancy hovering around 7.3% in Q2 2025. However, demand remains strong in mid-bay and infill segments, where leasing for 100k–250k s.f. facilities made up 27% of Q1 volume.

Market Insight #2: Private Credit Faces Scrutiny as Retail Access Expands

Moody’s and the SEC have raised concerns about systemic risk in private credit markets, especially as retail channels gain exposure through interval funds and non-traded BDCs. While the sector now exceeds $1.7T globally, transparency and liquidity mismatches could stress fund structures during volatility. Despite this, institutional backing remains strong—HSBC recently committed $4B toward expanding its private credit platform.

Investor Concept of the Week: “Flight to Function” – Why Quality Wins in Industrial

The current leasing environment highlights a shift in tenant behavior. Occupiers are prioritizing well-located, energy-efficient facilities with modern specs—think 32’+ clear heights, ESG-aligned upgrades, and strategic access to transportation nodes. As construction pipelines taper off, properties that offer true utility are absorbing demand, while outdated inventory lags.

Why It Matters:

• Class A facilities are outperforming on rent growth by ~100 bps over B/C stock.

• Functional obsolescence is widening rent spreads, driving consolidation into top-tier space.

• Cap rates for stabilized, modern warehouses are holding firmer in volatile capital markets.

Investor Strategy: Lock in Core Industrial While the Window Is Open

Investors should act now while cap rates are wider and competition is selective. With 86% of 2025’s under-construction inventory expected to deliver by year-end, 2026 may see a supply cliff. This positions today’s acquisitions for favorable rent growth and value appreciation.

Action Plan:

• Focus on acquiring or repositioning high-functionality assets in supply-constrained markets.

• Prioritize properties near key distribution hubs with flexible tenant appeal.

• Use near-term macro noise to negotiate on pricing, but underwrite conservatively on rent growth.

Final Thoughts

Industrial fundamentals remain solid despite headlines. Supply chains are recalibrating, speculative development is cooling, and high-quality facilities continue to lease. Meanwhile, private credit markets are expanding—albeit under a sharper regulatory lens. At Hanson Capital, we’re staying disciplined and opportunistic: targeting industrial assets with long-term durability and deploying private capital where structure and transparency drive outsized risk-adjusted returns.