Washington – 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.
Because of this, Guirguis and Seiler forecast that total net absorption in the second half of 2021 will be 162,600,00sf with a quarterly average of 81,300,ooosf. In 2022, they projected net absorption of 334,600,000sf with a quarterly average of 83,600,000sf. 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.”