As part of CommercialCafe‘s Expert Roundup series, we sat down (virtually, of course) with a number of commercial real estate experts from across the country to get their takes on why the industrial asset class is so resilient, what challenges it still faces, what the near- to mid-future has in store and even break it down to a regional perspective.
Q: Industrial construction projects in the U.S. are projected to eclipse 342 million square feet in 2021 – the highest in five years. What are the main drivers of this expansion?
Brian Johnson: E-commerce is one of the key drivers of the increase in industrial construction projects. Year-over-year growth continues to be in double digit territory and there is no sign of this abating. Additionally, we are seeing the revival of manufacturing in the United States and increased demand from “big box” retailers needing distribution spaces.
Q: Industrial real estate has fared better that other asset classes in the last year. How has 2020 affected the industrial market this year and beyond?
Brian Johnson: The appetite for industrial investments predated COVID, especially in Southern California and the coastal regions. But once the country shut down we saw an increased demand for fulfillment centers and investors followed that demand. We expect investors to continue to look toward industrial real estate in 2021 as a primary area for growth and safety.
Q: Are there any other use-types besides e-commerce and cold storage that you see expanding more in the future?
Again, manufacturing has been on the rise lately and “big box” stores continue to show strength, and that will mean both new and expanded fulfillment and distribution centers.
Q: What’s the #1 challenge industrial is facing in 2021?
Logistics and infrastructure for sure. If we do not have the ability to quickly and efficiently move goods around the country and the world then we will see the sector impacted by forces outside its control. This could likely have ripple effects across all sectors.
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