An exceptionally high note. That’s how 2021 ended for the U.S. industrial market, according to the latest research from JLL.

According to JLL’s most recent U.S. Industrial Outlook report, this sector saw record-setting rent growth in 2021 and soaring net absorption. And vacancy rates? They fell to minuscule levels.

The numbers tell the story. According to JLL, industrial tenants signed leases for 122 million square feet in the fourth quarter of last year. Industrial rents rose to $7.11 a square foot during the same quarter. That continues a long trend: JLL reported that industrial rents have grown by 11.3 percent since the fourth quarter of 2020.

Absorption stats were impressive, too. More than 141.8 million square feet of industrial space was absorbed in the U.S.market in the fourth quarter, according to JLL. This was just the continuation of a boom year for the industrial sector. JLL said that year-end net absorption totals exceeded 496.3 million square feet.

Overall, net absorption in the industrial space increased by more than 81 percent on a year-over-year basis.

And for the first time in history, the vacancy rate for industrial real estate dropped below the 4 percent threshold, with this rate falling to 3.8 percent in the fourth quarter.

Who leased the most industrial space in 2021? JLL said that logistics and distribution companies leased 46 percent more industrial space last year than they did in 2019, while 3PL companies leased 41 percent more space during the same time period.

Overall tenants leased more than 500 million square feet of industrial space in 2021. This is the first time tenants have also cracked the 500-million-square-feet mark.

Not surprisingly, developers have been busy, too. JLL reported that developers completed nearly 89 million square feet of new industrial product in the fourth quarter of last year and 304 million square feet throughout the entire year.

Nearly two-thirds of the industrial buildings that these developers delivered last year were preleased, up from 45 percent in 2020 and 50 percent in 2019.

Investors haven’t been shy, either, about taking advantage of the U.S. industrial boom. According to JLL, investors sunk $143 billion in industrial facilities in 2021. That shatters the previous annual total from 2019 by 32 percent.

In the fourth quarter of last year alone, U.S. industrial investment activity hit $59 billion, good enough for an all-time quarterly record.

And for the rest of this year? JLL says that the demand for industrial space that the country saw in 2021 is expected to continue this year. JLL predicts that industrial rents will rise as demand outpaces supply. JLL also said that industrial vacancy rates might fall again this year if the availability of industrial space continues to shrink and net absorption keeps rising.

“The risks are manageable, and the outlook is strong.”

This was the key takeaway from Cushman & Wakefield’s CRE 2022 Outlook. In the report, Cushman & Wakefield Head of Economic Analysis and Forecasting Rebecca Rockey discussed the company’s predictions for the US. commercial real estate market.

While some predictions will come as no surprise, others are not so straightforward. All things considered, 2022 looks good for CRE in America.

Office

Cushman & Wakefield predicts a turning point for office next year, and there are encouraging signs that this recovery has already begun as people gradually revert to normal behavior. One sign is that leasing is trending higher. Businesses are signing longer-term leases, and sublease space is trending down. Vacancy is also falling in an increasing number of markets, a trend that Cushman & Wakefield predicts will peak by year-end in the U.S.

Offices will continue to calibrate for remote work, challenging building owners to find the best ways to attract and maintain tenants.

Regional absorption is also on track to turn positive in the second half of 2022.

Industrial

Last year was a booming one for industrial, with demand surpassing 500 million square feet for the first time ever. According to Rockey, this rate of growth is not sustainable and was largely driven by confined demand from 2020. Cushman & Wakefield says that demand will remain 100 million square feet higher than historic norms, exceeding 400 million square feet for the next few years.

Despite the major pickup on the supply side, Rockey thinks vacancy will remain under 4 percent for the next two years in the aggregate. This will only further fuel rent growth. Values are expected to climb by close to double digits, and investors will be left to decide how much they’re willing to pay.

Retail

Retail was another sector that experienced a record year in 2021. Demand surpassed 37 million square feet in 2021 — the sector’s best year since 2017. In combination with the constrained supply side that was largely oriented toward mixed-use in specific high-growth markets, vacancy peaked at a much lower level. Vacancy continues to trend downward toward 6 percent. Cushman & Wakefield predicts an even further dip as we head into 2023.

“This is a different territory for retail,” Rockey said. “We’re seeing this narrative unfold. Recovery will pick up steam in gateway cities where international tourism, return to office and accelerating business travel will start to push the fundamentals in a more significant manor.”

Multifamily

Like industrial, last year’s significant growth rate is not sustainable over the long term, but Cushman & Wakefield says demographic forces will continue to fuel the sector during the next few years.

Rockey expects higher rates still on household formation: 1.3 million square feet this year and 1.2 million square feet in 2023. This year’s rate of demand is translating into one that is more than twice the long-term average.

Though supply is ramping up, it’ll remain a low vacancy environment for the next couple of years. Of course, this factors into rent pressure, resulting in strong overall rent growth. This will remain an asset class that investors will remain focused on, but the recoveries and expansions in retail and office will also start to push investors and rotate them back into those sectors, Rocky said.

Alternatives: Self Storage, Data Centers, Student Housing, Life Sciences, Senior Housing, SF Rental Homes

Just 10 percent of all sales were alternative pre-pandemic. Now it’s 15 percent and climbing, with demographics driving niche categories, like life sciences, which were among the first to post positive absorption within the broader office of R&D space markets.

The US commercial property insurance market continues to feel the sting from catastrophic weather and disaster events, which have become more severe, more frequent and harder to predict, according to the 2022 U.S. Property Market Outlook report from Risk Placement Services (RPS).

Expecting the unexpected has become standard for a market where losses from unanticipated catastrophic weather have reached the billions of dollars, RPS said. In recent years, such events have occurred in unusual regions or seasons, such as last February’s Winter Storm Uri in Texas, or the tornadoes that devastated portions of the central and southern US in December.

In a bid to boost profitability, E&S carriers have been dropping unattractive risks, raising rates, lowering coverage limits and adjusting policy terms, RPS said. Click to read more at www.insurancebusinessmag.com.

What had long been an afterthought in most lease agreements has been spotlighted the past two years as tenants, property managers and landlords wrestled with ‘force majeure.’

In its most basic interpretation, ‘Force Majeure’ translates to a superior force.’ Its use can be traced back to Roman law, which incorporated the term ‘vis major’ and determined “possibility” was the limit of obligations. Today, the clause included in many contracts “is meant to protect the parties in the event that a contract cannot be performed due to causes which are outside the control of the parties and could not be avoided by the exercise of due care,” according to Black’s Law Dictionary.

“The benefit of a force majeure clause is that it allows the parties to fashion a rational allocation of the risk imposed by unknown and uncontrollable events,” says Paula M. Bagger, Principal at Bagger Law. “In an ideal world, in which the parties have equal bargaining power and (importantly) are paying equally close attention to the entire contract, including the “boilerplate” during negotiations, a force majeure clause allows the parties to select a resolution that works best for their situation.” Click to read more at www.rednews.com.

HOUSTON, Feb. 02, 2022 (GLOBE NEWSWIRE) — The national industrial market continues to shatter records across key metrics, according to Transwestern’s fourth quarter U.S. Industrial Market report. Vacancy dropped to 4.3% during the quarter, its lowest rate in almost 25 years – a result of unrelenting demand and delivery of less than 100 million square feet of space nationally. Net absorption registered 650 million square feet for 2021, obliterating the occupancy growth record set in 2018 (431 million square feet) and more than double 2020’s figure.

“The industrial sector continues its tear, evidenced by yet another remarkable quarter,” said Matthew Dolly, Research Director at Transwestern. “Rents grew in every market, even those that have historically commanded rates well above the national average. Economic conditions, consumer behavior and supply chain snarls all play a role: More investors are looking to real estate as a hedge against rising inflation, and logistics firms need the space.”

The U.S. average asking rent ended the year at $7.20 per square foot, increasing at the fastest pace for a calendar year since the start of the pandemic. Over 75% of tracked markets saw rents rise by more than 5% throughout 2021, with five markets – Inland Empire, Los Angeles, Baltimore, New Jersey and Philadelphia – exceeding 20%.

Many coastal markets continue to report the lowest availability as a percent of stock. Over the course of the year, markets experiencing the largest decreases in availability included Las Vegas, Cincinnati, and San Diego. Click to read more at www.globenewswire.com.