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