Key Points
- Industrial recently replaced residential as JLL Income Property Trust’s largest allocation, at 38% of the portfolio.
- Industrial leasing strengthened at the start of the year, up 17.8% in the first quarter of 2026 compared to the same period in 2025, according to JLL.
- Allan Swaringen, CEO of JLL IPT, says he is “bullish” on the industrial sector, as new opportunities continue to present themselves and returns are now better than in the multifamily sector.
A version of this article first appeared in the CNBC Property Play newsletter with Diana Olick. Property Play covers new and evolving opportunities for the real estate investor, from individuals to venture capitalists, private equity funds, family offices, institutional investors and large public companies. Sign up to receive future editions, straight to your inbox. Industrial may be the least sexy sector of real estate, but it’s fast becoming one of the hottest. Fundamentals are improving, new supply is being absorbed, and global political and economic factors are fueling demand. Industrial recently replaced residential as JLL Income Property Trust’s largest allocation. It represents 38% of the portfolio, which holds approximately $7 billion in total assets under management. JLL IPT is a daily value perpetual life REIT advised by LaSalle and sponsored by JLL. Allan Swaringen, CEO of JLL IPT, says he is “bullish” on the industrial sector, as new opportunities continue to present themselves and returns are now better than in the multifamily sector. “We can buy warehouses today where the cash yield is 5.5 to 6.5 percent, while apartments trade today where the cash yield is 4.5 percent. This is a better option for us to get higher yields in the current market,” Swaringen said. Industrial leasing strengthened at the start of the year, up 17.8% in the first quarter of 2026 compared to the same period in 2025, according to JLL. Approximately 145 million square feet of leases were signed, of which 72% were new leases. The first quarter historically underperforms compared to the rest of the year, but this first quarter has shown disproportionate strength. According to the report, performance was largely driven by continued trends of flight to quality and tenant consolidation into more efficient facilities. The national vacancy rate held steady at 7.5% during the quarter, but is expected to decline as supply is quickly absorbed and new construction stagnates. Swaringen highlighted three factors behind his bullish stance. First, rising energy and transportation costs. Each warehouse in JLL IPT’s portfolio, 64 across the country, is within three to five miles of major transportation infrastructure, reducing costs. “Airports, seaports, interstate highways and rail spurs…if you have warehouses near these transportation hubs, they tend to have higher rent growth in a rising market, and they attract tenants in a falling market,” he said. Second, against the backdrop of the latest conflicts in the Middle East, increased defense spending and continued efforts to increase domestic production capacity will likely boost demand for U.S. warehouses and industrial facilities, he said. Finally, he noted that companies are increasingly building backup supply chains and storing additional inventory in more locations to avoid disruptions from political conflicts as well as climate-related events. All this increases the demand for warehouses. As for supply, unlike other sectors, where supply and demand can quickly become unbalanced due to long construction times, warehouses can be built very quickly and are therefore much more responsive to supply and demand. “There was some speculative overbuilding about a year and a half ago, but absorption has really taken off in the last year, and we’re seeing the strongest rent growth of any property type,” Swaringen said.