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What is one of the major post-pandemic take-aways for the “Industrial” sector of Commercial Real Estate?

It is safe to say the entire commercial real estate industry decelerated as the COVID-19 pandemic set in however, it was brief for industrial real estate. According to several panelists from premier real estate companies at the NAIOP 2020 I.CON Virtual Conference, industrial real estate is expected to accelerate Q-3/4 and on through 2021.

At the beginning of the pandemic, stringent shelter-in-place government mandated restrictions caused many businesses to shutter indefinitely including dine-in restaurants, gyms, nightclubs, convention centers and entertainment venues. As a result, commercial real estate professionals were worried about rent collections and deferral agreements as opposed to pre-pandemic concerns of labor shortages. Two very different challenges! The impact varied among markets yet, on a positive note it was not as prevalent as predicted.

So, what is the major take-away for industrial real estate post-pandemic? If it is not already completely obvious, the accelerated adoption of e-commerce. Clearly e-commerce is gaining more strength as the demand skyrocketed ordering supplies online, everything from groceries to pharmacy to home improvement goods. COVID-19 most definitely is a major influence of online buying trends. Which leads to the next issue, with all the demand to keep inventory levels plentiful and close to consumers, will we run out of industrial space? Although the Panelists from I.CON Virtual agree the demand will increase significantly they also agree it is unlikely we will run out of space.

The industrial sector of commercial real estate has an overall positive growth outlook without any indications of slowing down in the near future. The pandemic further confirmed this outlook with the accelerated adoption of e-commerce which in turn triggered additional demand for industrial space.

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