Net Absorption of Industrial Space Could Reach 150 Million Square Feet in 2013

NAIOP releases inaugural eight-quarter/two-year industrial demand forecast

January 28, 2013

NAIOP Industrial Demand Forecast Table 2

The U.S. industrial market is poised for significant growth throughout 2013 and 2014, with annual net absorption forecast to reach 150 million and 175 million square feet in 2013 and 2014 respectively, according to the NAIOP Industrial Space Demand Forecast.

These levels are 50 and 75 percent above the net absorption figure posted for 2012 of roughly 100 million square feet, with robust growth attributed to reduced risk of a double dip recession and improving GDP and job growth.

“Industrial has heated up,” said Dr. Randy Anderson, University of Central Florida, one of the authors of the forecast. “The industrial segment will experience strong and continuous growth from the first through the fourth quarter of 2014 due to clarity post-election and post-fiscal cliff, easing in the credit markets, and improvement in both consumer and business confidence.”

The predictive model is funded by the NAIOP Research Foundation and was developed by Anderson and Dr. Hany Guirguis, Manhattan College. The forecast is based on a process that involved testing more than 40 economic and real estate variables that theoretically relate to demand for industrial space, including varying measures of employment, GDP, exports and imports, and air, rail and shipping data. Leading indicators that factor heavily into the model include the Federal Reserve Board’s Index of Manufacturing Output (IMO), the Purchasing Managers Index (PMI) from the Institute of Supply Management (ISM), and net absorption data from CBRE Econometric Advisors.

NAIOP Industrial Demand Forecast Table 1

Table 1 shows actual versus forecast net absorption. The model successfully projected a drop and rebound in net absorption in 2009 and 2010, as inventory supplies dwindled.

In 2010, the NAIOP Research Foundation awarded a research grant to Anderson and Guirguis to develop a model for forecasting net absorption of industrial space in the United States. A white paper describing the research and testing behind the model for NAIOP’s Industrial Space Demand Forecast is available on the NAIOP Research Foundation website.

ISM, the Federal Reserve and CBRE Econometric Advisors assume no responsibility for the Forecast. Absorption forecast tracks with CBRE data and may vary when compared with other data sets. Data includes warehouse, distribution, manufacturing, R&D and special purpose facilities with Rentable Building Area of 10,000 SF-plus.

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About the NAIOP Research Foundation: The NAIOP Research Foundation was established in 2000 as a 501(c)(3) organization to support the work of individuals and organizations engaged in real estate development, investment and operations. The Foundation’s core purpose is to provide these individuals and organizations with the highest level of research information on how real properties, especially office, industrial, retail and mixed-use properties, impact and benefit communities throughout North America. For more information on how to contribute or for complimentary research reports, visit

Kathryn Hamilton