On July 20th, 2023, Sealy & Company hosted its semi-annual Industrial Real Estate Outlook call. This webinar featured a panel of real estate experts who were carefully selected to offer unique perspectives from an industry-leading operator, broker, and banker point of view. The panel consisted of Scott P. Sealy, Sr., chairman of Sealy & Company, serving as the operator, Dennis Mitchell, Senior Managing Director of Capital Markets at Jones Lang Lasalle as the broker, Jim Komperda, Senior Vice President of Institutional Real Estate Group at KeyBank National Association as the banker, and finally Paul M. Barausky, Chief Distribution Officer for Sealy Investment Services acting as the moderator for the panel.

This call focused on three main topics. First, the trio discussed the industrial sector’s near and long-term performance outlook. Another point in the conversation centered around understanding the effects of elevated interest rates on industrial real estate debt and equity. The different trends driving the industrial real estate sector were equally covered during the discussion.

During the call, Scott Sealy, Sr. explained the risks occurring in this current market and how Sealy & Company has approached the current trends based on its history of successfully navigating nine previous market cycles. “Everybody looks good when the market is stable, and nothing is changing, and you can go out with certainty and buy assets. But we’re in an uncertain market, and interest rates have certainly affected it,” remarked Mr. Sealy. “You don’t know where interest rates will go, so your underwriting has to be more cautious. You have to use lower leverage to limit the risk on interest rates, look for higher credit quality tenants, and stay in proven markets, not peripheral markets, at this point in time. This has been our strategy as we’ve moved forward. But it still gets back to our proven investment strategy of buying quality buildings in the right markets with credit-worthy tenants and then operating focused on delivering the return and mitigating the risk.”

The overall arching sentiment of the call was well captured by Jim Komperda, who added, “We like to use the phrase normalization, not deterioration when you think about the current climate. It’s easy to think about softening or growth moderating as a bad thing, but it’s important to have the historical perspective of where we’ve been over the last few years because it’s still pretty good from a fundamentals perspective.” The forecasted outlook for the industrial sector was unanimous from all three panelists: the operator, the broker, and the banker. “What has happened in our market through the supply chain and the diversification of the flow of goods is continuing. I believe we will maintain absorption above pre-pandemic levels, which will do plenty for us to come out and continue over the next several years in very good shape,” stated Dennis Mitchell.