First Industrial Realty Trust, Inc. (FR): 5 FORCES Analysis [Nov-2025 Updated]

You're digging into the competitive moat for First Industrial Realty Trust, Inc. (FR) as we close out 2025, and honestly, the landscape is a fascinating mix of pressure and pricing power. On one hand, suppliers are definitely making things tough-think high construction material costs and lenders demanding more because interest rates are elevated. But here's the real story: your customers have very little say, proven by that impressive 32% cash rental rate increase on 2025 lease signings, which helps keep occupancy rock solid at 94.0% as of Q3 2025. While rivalry for prime development spots is intense, FR is showing it can outperform peers, posting 6.1% Cash Same Store NOI growth in Q3 2025, all while the barriers for new entrants and substitutes remain high. Keep reading; we break down exactly where the leverage lies in this critical analysis.

First Industrial Realty Trust, Inc. (FR) - Porter's Five Forces: Bargaining power of suppliers

The bargaining power of suppliers for First Industrial Realty Trust, Inc. (FR) is elevated in late 2025, driven by persistent inflation, trade policy impacts, and tight labor markets, though FR's internal platform offers some insulation.

Construction material costs are definitely feeling the pinch from tariffs and inflation in 2025. A Cushman & Wakefield analysis as of late September 2025 showed that tariffs in effect that year raised material costs by 9% compared to the previous year, while total project outlays for industrial assets climbed by 4.6%. 50% tariffs on steel and aluminum, up from 25%, are a major factor. As of August 2025, nonresidential construction input costs were up 2.6% year-over-year, with iron and steel prices specifically rising 9.2% and copper and cable prices jumping 13.8%.

Land suppliers in First Industrial Realty Trust, Inc. (FR)'s target coastal and high-demand MSAs remain highly constrained, which translates to higher input costs for future inventory. For instance, in the first quarter of 2025, First Industrial Realty Trust, Inc. (FR) acquired a 61-acre land site in Philadelphia for $16 million. This follows the acquisition of two land sites totaling 81 acres for a total of $26 million in late 2024, which included the final parcel at First Park Miami.

Specialized construction labor shortages continue to cause project delays and increased wages. Construction wages grew 4.2% from June 2024 to June 2025, outpacing the national average. For skilled trades, hourly rates saw increases of 8-12% in some locations. Union construction workers received an average pay rise of 4.5% between March 2024 and March 2025, compared to 3.2% for non-union workers. The industry needed to attract about 439,000 new workers in 2025 to meet demand.

Financial capital suppliers, meaning lenders, hold high power due to the elevated interest rate environment that persisted into 2025. First Industrial Realty Trust, Inc. (FR) refinanced a $200 million unsecured term loan in March 2025 with an initial interest rate of SOFR plus 85 basis points plus a 10 basis point SOFR adjustment. The company did enter forward-starting interest rate swaps to effectively fix the all-in rate on this loan at 4.10%, with the new fixed rate becoming effective on February 2, 2026.

First Industrial Realty Trust, Inc. (FR)'s integrated development platform mitigates some reliance on third-party developers, which can temper supplier power in that specific area. As of March 31, 2025, First Industrial Realty Trust, Inc. (FR) owned and had under development approximately 70.2 million square feet of industrial space. The company reported signing 772,000 SF of New Leases for Development Projects in the Third Quarter and Fourth Quarter To-Date (as of October 15, 2025).

Here is a quick look at some of the key cost and financing metrics impacting supplier leverage:

The pressure from these input costs is evident in First Industrial Realty Trust, Inc. (FR)'s leasing success, as cash rental rate increases on leases signed to-date commencing in 2025 reached approximately 32%.

• Tariffs on steel and aluminum are at 50%.
• Iron and steel prices rose 9.2% year-over-year as of August 2025.
• Skilled labor wage increases reached 8-12% in certain areas.
• The company expects to capitalize $0.09 per share of interest in 2025.
• The $200 million term loan's fixed rate is set at 4.10% effective February 2026.

First Industrial Realty Trust, Inc. (FR) - Porter's Five Forces: Bargaining power of customers

You're assessing the competitive landscape for First Industrial Realty Trust, Inc. (FR) as of late 2025, and the power customers hold in negotiating lease terms appears quite limited. This is not abstract; it shows up directly in the rent checks.

Power is low, evidenced by a 32% cash rental rate increase on 2025 lease signings. That figure reflects 95% of the 2025 square footage expirations that have been addressed to date. Honestly, if you strip out that one large, fixed-rate renewal in Central Pennsylvania-which was 1.3 million square feet-the cash rental rate increase jumps to 37%. That kind of pricing power suggests tenants are accepting terms rather than dictating them.

The fundamental need for First Industrial Realty Trust, Inc.'s assets keeps the pressure off tenants. High-quality, modern logistics space near consumers is essential, and supply remains tight. Based on CoStar data, vacancy across Tier 1 U.S. markets settled at 6.3% at the end of the third quarter of 2025, which was flat compared to the second quarter. Furthermore, in the company's 15 target markets, new construction starts totaled 41 million square feet, while completions were 37 million square feet, showing supply is being absorbed quickly.

E-commerce and supply chain reshoring continue to drive non-discretionary tenant demand, which is the engine behind this pricing strength. While President and CEO Peter Baccile noted that tenant decision-making remained deliberate due to uncertainty around tariffs, touring activity did pick up in the third quarter. The broader market context supports this, with national total leasing projected to approach near-record levels in 2025, estimated by CBRE at 900 million square feet.

Tenant switching costs are inherently high when dealing with complex logistics infrastructure; moving a distribution network is not like changing office furniture. This operational friction naturally favors the incumbent landlord when leases come up for renewal. The sheer volume of leasing activity underscores the market's underlying strength:

• Total leasing nationally projected for 2025: 900 million square feet.
• Net absorption in First Industrial Realty Trust, Inc.'s 15 target markets in Q3 2025: 11 million square feet.
• Total net absorption year-to-date Q3 2025: 22 million square feet.

Occupancy remains strong at 94.0% as of Q3 2025, which significantly limits tenant negotiation leverage. This figure is only down 20 basis points from the second quarter of 2025, maintaining a high floor for pricing power. Here's a quick look at the recent occupancy trend:

Even with the slight dip, the market is tight enough that First Industrial Realty Trust, Inc. is already securing strong rates for the next cycle, reporting a 31% cash rental rate increase on leases signed to-date commencing in 2026, covering 31% of those 2026 expirations by square footage.

Finance: draft 13-week cash view by Friday.

First Industrial Realty Trust, Inc. (FR) - Porter's Five Forces: Competitive rivalry

You're looking at the competitive heat in the industrial space, and let me tell you, it's turned up. For prime assets, the rivalry is definitely intense. We see peers like Rexford Industrial Realty, Inc. battling for the best infill locations. First Industrial Realty Trust, Inc. reported signing 501,000 SF at its Camelback 303 JV in Phoenix and 56,000 SF at First Park Miami Building 3 in South Florida during the third quarter of 2025. That's direct competition in development pipelines.

The overall market remains fragmented. First Industrial Realty Trust, Inc. competes against a long list of national and regional players. Honestly, this fragmentation means you have to be sharp on execution to stand out.

Competition is laser-focused on development in supply-constrained markets. You see it in the leasing activity First Industrial Realty Trust, Inc. is pushing in places like Phoenix and South Florida. Capital is competing fiercely for those limited Class A assets in South Florida, which is rebalancing after years of record absorption.

First Industrial Realty Trust, Inc.'s operational performance shows they are keeping pace, even with the heat. The company posted a Cash Same Store NOI growth of 6.1% in the third quarter of 2025. If you strip out the insurance claim recovery, that growth was 5.4%. That outperformance in a tight spot speaks volumes about their leasing power, which saw cash rental rate increases of about 32% on leases commencing in 2025 year-to-date.

Here's a quick look at how First Industrial Realty Trust, Inc. stacked up on some key Q3 2025 figures versus a key competitor, Rexford Industrial Realty, based on available data:

The competition for older, Class B/C assets is certainly less fierce on the acquisition front. Still, you have to factor in the capital expenditure required for modernization. That's a different kind of competitive hurdle-one measured in required CapEx dollars, not just bid prices.

The competitive environment is also reflected in leasing metrics:

• Cash rental rate increase on leases commencing in 2026: 31%.
• Cash rental rate increase on leases commencing in 2025: 32%.
• Total industrial space owned and under development (as of September 30, 2025): approximately 70.4 million square feet.
• Q3 2025 EPS (GAAP): $0.76 per share.
• Common stock dividend declared for Q4 2025: $0.445 per share/unit.

Finance: draft 13-week cash view by Friday.

First Industrial Realty Trust, Inc. (FR) - Porter's Five Forces: Threat of substitutes

You're assessing the competitive landscape for First Industrial Realty Trust, Inc. (FR), and the threat of substitutes-alternative ways customers can meet their logistics needs-is generally low, but specific pockets of innovation warrant attention. Honestly, the fundamental need for physical space to store, sort, and move goods isn't going away; it's the bedrock of global commerce.

The core business of physical warehousing remains essential. While the broader U.S. commercial leasing market generates over $257 billion in annual revenue in 2025, the industrial segment is a resilient part of that. Despite headwinds, national in-place industrial rents averaged $8.72 per square foot in September 2025, showing a 6.1% year-over-year increase. First Industrial Realty Trust's own in-service occupancy ended Q3 2025 at 94.0%, with guidance for year-end occupancy between 94% and 96%. This strong demand for their core product keeps the overall threat of substitution low.

However, we must look at the specific substitutes that are carving out market share, even if they are niche or geographically constrained. Repurposing older, Class B/C industrial buildings is one such niche. While First Industrial Realty Trust focuses on modern, supply-constrained markets, the market for smaller facilities-often older stock-shows resilience. Construction starts for industrial facilities smaller than 100,000 square feet are up 16% year-over-year in 2025. Furthermore, the average sale price for these smaller buildings has ballooned by 10.6% year-over-year, suggesting a competitive alternative for smaller users needing immediate, perhaps less-premium, space.

Alternative real estate classes are distinct asset classes, but their rapid growth signals capital diversion. Data centers, fueled by AI demand, are a major alternative use for industrial-zoned land, which management at First Industrial Realty Trust has acknowledged exploring. The global Data Center Colocation market was estimated at $69.9 Billion in 2024 and is projected to grow at a 13.0% CAGR through 2030. In the U.S., AI-related projects drove $31.5 billion in new data center development spending in 2024 alone. This massive capital flow into specialized facilities represents a clear, albeit distinct, alternative for capital and, in some cases, land use.

Vertical or multi-story warehousing is another substitute, but its viability is tied strictly to density. Building up instead of out maximizes storage capacity where land costs are prohibitive. The global Automated Vertical Warehouse market, valued at approximately USD 5.2 billion in 2023, is projected to grow at an 11.2% CAGR through 2032. This trend is most acute in land-constrained urban cores, which aligns with First Industrial Realty Trust's focus on supply-constrained markets, but the high cost and complexity mean it's not a universal substitute for their bulk distribution assets.

Here's a quick look at how the substitute markets are performing compared to the core industrial sector as of late 2025:

The threat remains manageable because First Industrial Realty Trust's pricing power is robust; cash rent changes on commenced leasing in Q3 were +26.5%. Still, you need to monitor the 15% baseline CAGR for data centers through 2027, as that signals where significant development capital is flowing.

First Industrial Realty Trust, Inc. (FR) - Porter's Five Forces: Threat of new entrants

You're looking at the barriers to entry in industrial real estate, and honestly, the deck is stacked against newcomers right now. The sheer scale of capital needed to compete with established players like First Industrial Realty Trust, Inc. is the first major hurdle.

Threat is low due to extremely high capital requirements for industrial development. New entrants face a landscape where construction costs are up over 40% compared to pre-pandemic levels. Furthermore, the cost of capital has recalibrated; in Q3 2025, investment cap rates were hovering near the 6% range, reflecting tighter credit availability. For a new player, assembling the necessary equity and debt for ground-up development is a massive undertaking.

Zoning and regulatory hurdles (NIMBYism) restrict new land development. While specific local zoning data isn't always public, the overall market slowdown in new projects suggests these local frictions are still present. New construction starts across the US industrial sector confirm this cooling pipeline. Summer 2025 starts totaled 45.8 million square feet, which is 41.7 percent below the 78.5 million square feet recorded in summer 2024. In February 2025, new project starts were down a staggering 75.8 percent year-over-year.

First Industrial Realty Trust, Inc. benefits from its scale and access to a renewed $850 million credit facility. This facility, closed in March 2025, was upsized by $100 million from its predecessor and carries an accordion feature allowing capacity up to $1 billion. They also refinanced a $200 million unsecured term loan. This ready access to liquidity dwarfs what a new entrant could secure quickly. Consider their scale: First Industrial Realty Trust, Inc. owned and had under development approximately 70.5 million square feet as of June 30, 2025.

New construction starts are down significantly in 2025, limiting new supply. This slowdown is evident in First Industrial Realty Trust, Inc.'s own pipeline, where planned development starts for Q2 2025 totaled 402,000 square feet with an estimated total investment of $54 million. While this limits new supply, it also means fewer existing assets are coming online to be acquired.

Acquiring existing, well-located properties is difficult due to limited availability. The flight to quality means tenants are prioritizing modern space, which keeps existing, well-located, high-quality assets tightly held. First Industrial Realty Trust, Inc.'s own balance sheet strength, evidenced by a debt-to-equity ratio of 0.88, allows it to compete aggressively for any available, high-quality existing properties.

Here is a quick look at the financial footing supporting First Industrial Realty Trust, Inc.'s competitive position against potential new entrants:

The reduced pace of new development starts further solidifies the position of incumbents:

• Summer 2025 Industrial Starts vs. Summer 2024 Starts: 45.8M SF vs. 78.5M SF
• February 2025 Starts YoY Decline: 75.8%
• Q3 2025 Industrial Cap Rates: Hovering near 6%
• Industrial Construction Cost Increase (vs. Pre-Pandemic): Over 40%