Demand for Industrial Real Estate Projected to Remain Strong in 2020

The 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. Click to read more at www.naiop.com.