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Although higher interest rates and tight lending conditions pose systemic risks for logistics real estate, local market conditions, particularly the supply pipeline, remain vitally important.

Intuitively, the markets most at risk face both high availability rates and robust construction activity. This is especially true in emerging logistics hubs that have been the focus of speculative developers, such as Savannah and Phoenix.

Meanwhile, other markets—including Las Vegas and Charleston—have been better able to absorb new product. However, these markets are highly exposed to a potential downturn in the U.S. economy that would hobble leasing activity.

Land-constrained markets, such as Miami and Southern California, are best-positioned. For example, although Riverside, CA has seen a notable increase in availability this year due in part to price-sensitive tenants pulling back from the market, a risk of overbuilding is unlikely to emerge.