Industrial Market Headed for Downturn?
During the pandemic, Industrial CRE has been scorching hot as e-commerce retailers raced to grow their warehouse presence in major cities in order to efficiently deliver goods to consumers. Despite this, economic indicators are pointing to a decrease in demand beginning in Q3 - 2020 and running until mid-2021.
NAIOP predicts that net U.S. industrial absorption will be negative in a big way when the Q3 2020 numbers are ultimately crunched: 141M SF. In Q4 2020, the report forecasts net negative industrial absorption of 72M SF, followed by negative absorption of 27M SF in Q1 2021.
NAIOP predicts that industrial's booming demand during the pandemic is merely a "sugar high" and therefore will not be long-lasting.
"Amazon.com was the difference maker during the second quarter of 2020,” Colliers International reported in its Q2 2020 industrial report for Chicago. “The e-commerce giant committed to an astounding 11M SF in 10 buildings."
“Lease renewals were trending towards shorter term at the start of the pandemic, though we are now seeing many companies staying in place with long-term renewals of five to 10 years,”
#Covid19 #Industrial #Downturn #NAIOP