What Is in Store for 2024

Joe Hollingsworth is fond of saying, “you can’t sell any corn flakes if you don’t have them on the shelf!” It is a call to keep up the inventory to meet the demand. The demand side has been a roller coaster for the last few years. In spite of the pandemic, the momentum of the Trump Bump and Trump tax reform kept demand ahead of supply. Certainly, that was also a function of the pandemic completely shutting off the supply for over a year and that train did not just pull onto a siding to let the train going in the opposite direction pass. It hit the other train head-on, and it was very slow to clear the tracks and get the pieces repaired and put back in working order. Thankfully, the supply train is back on the track and cautiously moving forward. At the same time, however, the demand roller coaster is pulling into its station for a quick reloading. The market seems a little quiet and scary.

We see 2024 with the supply train continuing to pick up steam and the demand coaster slowly clicking up the big hill to start a new ride. Many industrial developers are in a holding pattern as the financial industry is curtailing lending, particularly for speculative developments. Bank portfolios full of underwater apartments, commercial note calls, and office loans have little left to lend on new development. This will be the biggest drag on industrial development supply. Industrial development was constrained by the supply chain in the last few years, but now the constraint is financing. This will keep supply behind demand in 2024.

We are putting the “corn flakes” on the shelves in 2024. We currently have two buildings under construction in Mocksville, North Carolina totaling 283,000 SF. At the same time, we have in different stages of development 3,200,000 SF of additional industrial space in neighboring states (stay tuned for future announcements). We are fortunately in a strong position to be able to construct the new inventory without many financing constraints. This will help us get to market faster and meet the demand that will be growing again.

In the last 18 months, we have leased everything we have built before we have been able to complete the construction. We see this trend continuing despite the uncertainties of election year economics. We will keep the corn flakes coming!

“Joe Hollingsworth participated as one of our first equity investors. In addition, Joe Hollingsworth has served as a board member and leading advisor for strategic planning and direction.” — Scott Kelley, President and CEO, Service Center Metals