Industrial activity has been robust this year. Since the beginning of 2021, nearly 100 million new square feet have been delivered nationally. In addition, 450 million square feet is currently under construction and another 450 million is planned.

Even with this strong development pipeline, demand remains strong and net absorption is rising.

“A continued surge in imports from retailers restocking depleted inventories has exacerbated the shortage of warehouse space near major logistics hubs, highlighting the need for additional construction,” write Giurgiu and Seiler. “Although supply chain disruptions are less severe than earlier this year, the cost of building materials remains above pre-pandemic levels, and construction workforce shortages may delay industrial completions.’

Guirguis and Seiler say that strong returns on industrial properties will continue to attract investment, leading to higher transaction prices and more development. “There is continued need for more last-mile industrial space and cold-storage facilities, which supports a premium for properties adjacent to more densely populated areas,” they write.

Source: “The Outlook for Industrial Demand Rises Even Higher