Clear patterns are gifts to investors, and real estate investors benefit from plenty of established relationships between the various asset types and macro-economic, secular and even cultural trends. Industrial real estate has a particular relationship with our transportation infrastructure, and a recent paper reveals new details about how trends in the movement of goods are strong predictors of private and publicly held industrial real estate values.¹

The research finds “statistically significant positive long-run relationships” between truck tonnage and the Dow Jones Transportation Equity Index and industrial property values nationally. Trucking activity leads to higher warehouse demand, driving up rates and value. This was found to be true for the entire study period, but the effect of trucking tonnage on industrial values “increased significantly” after the financial crisis. Crude oil futures also have a significant relationship with industrial property values, but the relationship has been less consistent.

We have been investing in industrial assets for decades, and industrial developers we know have long suspected a relationship between overall movement of goods and warehouse demand, but it was little more than a hunch. Surprisingly there’s been little research on the relationship between transportation and industrial property values nationally. Most related research has focused on benefits of proximity to downtown areas, rail hubs and airports, leaving broader industrial trends unexamined.

The study examines those broad industrial trends using property data from 1994 to 2023 provided by NCREIF, and separately examines repeat sales in the Inland Empire, Chicago, Texas and Virginia. Truck tonnage “has a positive and significant relationship” with values in all four regions. Railroad activity also has a significant relationship to values, but only in the Inland Empire and Chicago.

The study also found a decades-long tight relationship between the Dow Transportation Index and the performance of industrial REITs. The robustness of this connection makes the Dow the easiest general metric for industrial investors to watch for macro trends.

Crude oil futures have a generally positive relationship with industrial values, which is surprising. Intuitively as fuel costs rise, transportation becomes more expensive, demand should soften, and demand for warehouse space would diminish. But the relationship is complicated, likely related more to general economic health spurring business activity even in the face of higher fuel costs.

The authors speculate that crude oil futures’ connection to real estate values was complicated by the rise in e-commerce, which is mostly facilitated by trucking. That likely obfuscated the relationship beginning around 2010 when e-commerce activity rose significantly. Today crude oil futures do not appear to offer a reliable short-term correlation to industrial values.

These newly examined relationships between industrial property values and transportation metrics are especially relevant given recent headwinds in industrial real estate and the need for investors to get an edge. Deliveries of new product have outpaced absorption every quarter since 3Q22, with vacancy rising nationally from 4% to 7.5%, according to CoStar. Rent growth has dropped to near zero from a 2022 peak of 12% for logistics properties and cap rates have increased about 100 basis points from a low of 6.15% in 2022. The supply wave has crested, and the findings from the recent paper provide investors the right metrics to watch for signs of recovery.

As shown in the graph below, trucking tonnage has largely flatlined in the U.S. since COVID, but it’s worth thinking about changes coming in the transportation business itself. Tesla expects to start shipping mass-produced Semis during the summer of 2026, and China has models close behind. The new trucks offer such significant advantages over traditional semis, they prompted a dramatic headline from Inc. magazine: The Tesla Semi Will Cost Double a Standard Truck—but the Math Shows It Could Kill Off Diesels.

Trucking already has a unique relationship with industrial property values, and should costs associated with moving goods by truck decrease, as feels very likely, that relationship will get deeper.

And that leads to the core concept revealed by the research, that industrial real estate as an asset class derives value from the service it provides to our supply chain. “Truck tonnage tends to be a reliable indicator of changes to industrial property values in the short term,” the paper confirms, offering investors a real-time window into valuation drivers that traditional real estate data doesn’t capture. In a market working through a supply hangover, freight volumes, transportation equities and the evolving economics of trucking should be an important part of investors’ underwriting. Infrastructure may be the foundation, as Buttigieg notes, but for investors, it’s also the signal.

Who: Everyone Who Thinks About Real Estate Development

What: A must-read on why development stays broken.

The Sparkle: We write this section to spotlight i productive innovation in a slow-to-change industry, but today’s highlight is more about how much room for improvement there really is. Written by a16z, with investments across industries, this piece succinctly describes headwinds keeping real estate development overly complicated and expensive. Plus, great charts and a fun headline: Every Building You've Ever Been In Was Designed By Software Built in 1997.

Of all the power produced in the U.S., 5% is used for lighting, and expectations are that well over twice that will be used for data centers in just a few years. The Appraisal did a special issue on data center trends and it’s worth a read as compute needs increase, data center development explodes and power requirements become more challenging to fulfill. We’ve covered data centers before as a real estate asset; our punchline was caveat emptor.

Link: https://appraisal.substack.com/p/the-appraisal-april-2026-the-state

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