How COVID will impact industrial RE

Above: Hines, together with funds managed by Oaktree Capital Management, L.P., announced in March they have closed on the property for the future development of two speculative industrial buildings, each 569,520 square feet in size, in the City of Glendale. 

By AZRE | Via AZBigMedia

Although industrial real estate has outperformed other commercial property types this year due in part to a surge in e-commerce, broader macroeconomic indicators suggest industrial space absorption will decline sharply in Q3 2020 and then rebound to positive levels in Q2 2021, according to the NAIOP Industrial Space Demand Forecast, released today.

Industrial net absorption is forecast to decline to negative 141 million square feet in Q3 2020. Net absorption is forecast to remain negative after Q3, with negative absorption of approximately 72 million square feet in Q4 2020 and 27 million square feet in Q1 2021. The forecast calls for a return to positive net absorption by Q2 2021. Growth in industrial absorption consistent with pre-pandemic trends, however, is not forecast to resume until Q1 2022.

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