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Industrial Construction Reaches All-Time High, Tenants Will Still Struggle To Find Space

industrial warehouse

In Prologis’ recent third quarter earnings call, CEO Hamid Moghadam was blunt in his assessment of the industrial sector’s supply-demand equilibrium:

“With vacancies at unprecedented lows, space in our markets is effectively sold out.”

It is, of course, little secret that industrial rents are at a premium and tenants are jockeying for what space they can find. But new details in Prologis’ Industrial Business Indicator report show just how much of an uphill climb supply will have before it meets current and future demand.

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How Transport’s ‘Rule of 1.5’ Is Driving Soaring Demand for Warehouse Space

The US industrial market is on pace for a record leasing volume with activity through July reaching 587 million square feet – 52 percent more than the year-earlier period, according to a new report from CBRE.

Sharply higher transportation costs – which are rising faster than rental rates – is helping to fuel this robust leasing activity.

The spike in transportation costs – across sea, land and air – is the result of backlogs at ports, rising fuel prices and increased strong consumer demand driven by e-commerce growth and the pandemic’s continued effects.

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Buildings Of Tomorrow: Future Warehouses

Amid this prolonged uncertainty, everyone agrees that the pandemic’s impacts are yet to be fully seen.

Nine months in, the health crisis is about to trigger a global economic crisis, and real estate sectors are reacting differently—some trends, that were already underway, are accentuated, while others are disrupted completely from their original course. One of the winning industries in COVID-19 times is industrial.
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