Demand for Industrial Real Estate Projected to Remain Strong in 2020

Industrial Demand Forecast Q12020

February 26, 2020

IDSF Table 1The NAIOP Research Foundation has revised its projections for industrial demand upward in a new report released today. The previous report, released in the third quarter of 2019, forecasted decreased demand into mid-2021 due to a lagging supply of available space and economic uncertainty. However, as trade disputes ease and the economy remains strong, industrial demand is expected to rebound to the robust levels predicted in early 2019.

According to Dr. Hany Guirguis of Manhattan College and Dr. Timothy Savage of New York University, quarterly net absorption of industrial real estate will remain at or above 50 million square feet on a sustained basis through Q2 2021. Demand is forecast to decrease slightly over the next year, with net absorption estimated at 48 million square feet during the final quarter of 2021.

The report, written before the recent economic fallout from the coronavirus (COVID-19) was manifest, listed several underlying factors leading the rebound:

  • E-commerce continues to surge. According to the Federal Reserve, e-commerce as a share of total final sales in the U.S. has grown approximately 1% per year, from 4% in 2010 to 11% in 2019.
  • Monthly job growth is robust and prime-age labor force participation continues to rise, perhaps induced by stronger wage growth.
  • U.S. fiscal and monetary policies continue to accommodate economic growth, and indicators suggest that the economy will remain healthy through 2020. Long-term U.S. interest rates continue to decline, and long- and short-term interest rates have largely decoupled.
  • The yield curve remains relatively flat; the spread between 10-year and 3-month U.S. Treasury yields has been below 50 basis points (bps) for a year, and it was negative for nearly a quarter in 2019.
  • Inflation in the U.S., measured by the 10-year break-even rate, remains nearly 50 basis points below the Federal Reserve’s target of 2%.

These wide-ranging economic factors all support increased demand for industrial real estate,” said Thomas J. Bisacquino, President and CEO of NAIOP. “The long-term economic effects of the coronavirus are of course unknown, but we see a strong underpinning of the global economy, including low interest rates, the ever-increasing amount of online commerce and a demand for faster delivery of goods.”

Download the full report.

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About NAIOP: NAIOP, the Commercial Real Estate Development Association, is the leading organization for developers, owners and related professionals in office, industrial, retail and mixed-use real estate. NAIOP comprises 20,000 members in North America. NAIOP advances responsible commercial real estate development and advocates for effective public policy. For more information, visit

Kathryn Hamilton