Industrial real estate demand continues upward trend

Robust demand for space in the industrial market is expected to continue to bolster the U.S. commercial real estate sector over the next few years, according to BBG, a leading national due diligence firm.

That prediction is based on expectations of unwavering demand amid limited availability of space at warehouses, distribution centers and other buildings. One recent industry report said an estimated 850 million square feet of industrial space will be added to the market over the next five years.

Across the country, strong tenant demand has resulted in industrial vacancy rates hitting historic lows, hovering around 5 percent in the second quarter of this year.

The industrial market boom has been attributed to a healthy economy, particularly the torrid pace of growth in the e-commerce sector. According to census data, e-commerce sales grew 14.4 percent annually between 2012 and 2018.

Many U.S. cities have seen rapid growth in this commercial real estate sector. One of those cities, Charlotte, N.C., serves as a stellar example of this trend. Ballooning population growth in Charlotte and elsewhere across the state and a growing reputation as a major e-commerce hub have contributed heavily to the city becoming one of the top spots for industrial real estate growth. For instance, Amazon plans to open a $200 million robotics fulfillment center in Charlotte later this year. The Charlotte facility will be among three other Amazon facilities in the region, including a fulfillment center in nearby Kannapolis that opened last year.

"The industrial market has built tremendous momentum as a result of several factors: a resilient U.S. economy, tightening availability of space, the ongoing expansion of e-commerce businesses, and a steady influx of investment in this sector,” said Chris Roach, BBG CEO. “We anticipate that this market will continue to demonstrate strength and play a vital role in the overall growth of commercial real estate."