The future of the industrial real estate market
Preparing for slower demand growth
A convergence of factors is reshaping the industrial real estate sector, creating headwinds and uncertainty. Learn what they are, along with steps market leaders can take to help anticipate and adapt to new conditions.
Will this golden age of industrial real estate last?
Over the past five years, the industrial real estate sector—warehouses, distribution centers, flex spaces, and other industrial buildings with storage facilities—has experienced healthy growth while some other real estate sectors have struggled to sustain demand. Since 2012, year-over-year (YOY) rent growth has been positive and the availability rate has continued to decline.1 From 2014 to 2018, the industrial real estate market experienced a net absorption of nearly 1.4 billion square feet.2 The strong growth can be seen in the Financial Times Stock Exchange (FTSE) Nareit Industrial REITs Index, which had a compound annual total return of 16.2 percent in the five years through April 15, 2019.3 Compared to this, FTSE Nareit’s indices for All Equity REITs, Office REITs, and Retail REITs had returns of 9.9 percent, 7 percent, and 4.6 percent, respectively, during the same period (figure 1).4
1 Subscribed data from CBRE Econometric Advisors. View in article
2 Ibid. View in article
3 Nareit, “FTSE Nareit U.S. real estate index series daily returns,” April 15, 2019. View in article
4 Ibid. View in article