August 16, 2021
WASHINGTON, D.C. – Driven by sustained growth in e-commerce, demand for industrial real estate continues to outpace supply, leading to increases in net absorption for the rest of the year and through 2022, according to NAIOP’s Industrial Space Demand Forecast.
“With nearly 100 million new square feet delivered nationally since the beginning of the year, 450 million square feet currently under construction and another 450 million planned, the demand for industrial real estate still outpaces supply,” say the authors, Hany Guirguis, PhD, Manhattan College and Michael J. Seiler, DBA, College of William & Mary.
Because of this, Guirguis and Seiler forecast that total net absorption in the second half of 2021 will be 162.6 million square feet with a quarterly average of 81.3 million square feet. In 2022, they projected net absorption of 334.6 million square feet with a quarterly average of 83.6 million square feet. According to the report, the authors have returned to their pre-pandemic confidence intervals now that economic conditions have become more predictable.
High absorption rates are contributing to favorable conditions for industrial building owners and developers. Despite an increasing supply of industrial space, vacancy rates remain low, leases are being signed at higher rates and industrial transaction prices per square foot are increasing. A continued surge in imports from retailers restocking depleted inventories has exacerbated the shortage of warehouse space near major logistics hubs, highlighting the need for additional construction.
“Even though the increases in COVID-19 cases that we are now seeing threaten once again to disrupt a stable overall economic rebound, industrial real estate has been and remains a bright spot in the commercial real estate industry,” said Thomas J. Bisacquino, president and CEO of NAIOP. “Lower unemployment rates, and increased consumer demand should continue through the end of year, sustaining the growing need for warehouse and distribution facilities.”
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About NAIOP: NAIOP, the Commercial Real Estate Development Association is the leading organization for developers, owners, investors and related professionals in office, industrial, retail and mixed-use real estate. NAIOP provides unparalleled industry networking and education and advocates for effective legislation on behalf of our members. NAIOP advances responsible, sustainable development that creates jobs and benefits the communities in which our members work and live. For more information, visit naiop.org.
Kathryn Hamilton, NAIOP vice president for marketing and communications
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