4 Industrial Real Estate Trends That Will Stick Around in the New Year

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Industrial real estate is nothing new. In the past, the demand for industrial real estate has directly correlated to economic growth. However, it is currently in higher demand than ever and there are some very optimistic outlooks for industrial real estate for the near future. The ULI Real Estate Economic Forecast is the nation’s leading survey from renowned economists and analysts.

Using their predictions, let’s decipher some industrial real estate trends that will stick around in 2019.

1. E-Commerce driving up demand for industrial real estate opportunities

It’s no surprise that times have changed. Malls are becoming ghost towns, traditional big box stores are shuttering, and delivery windows are becoming shorter and shorter. E-commerce has taken the market by storm and it doesn’t seem to be slowing down anytime soon. The growing need for instant gratification with quick delivery directly parallels the need for industrial distribution space. It is projected that more than 1 million square feet of distribution space will be needed in the upcoming year to accommodate new and established company’s needs.

2. Returns will remain high

With E-Commerce driving the industrial real estate market higher than ever before, returns for the industrial sector are projected to remain high. According to ULI, they are forecast to stay around 11%, almost double office returns -- which is the next highest category at 6%.  Though they may begin to stabilize by 2020, the industrial real estate division is projected to continue to remain the highest category for returns.

3. The market is expanding to a variety of locations

The increase in demand for industrial properties along with more competition between lenders creates new opportunities in various areas of the U.S. Once, industrial real estate went hand-in-hand with large areas of land just outside of populated cities. However, in the year to come, we will see a need for smaller industrial buildings in close proximity to densely populated areas like New Jersey and Atlanta.

Adversely, thanks to President Trump’s tax reformation and push toward maintaining jobs in the U.S. we will also see an increase and extra large industrial space in the Midwestern part of the country away from large cities.

4. Demand outweighs supply in the Cold storage and other innovative realms

While online grocery shopping via websites and apps has not been around long, it is becoming increasingly popular. Amazon, Instacart, Postmates and many other digital brands have created a demand for development in modern cold-storage facilities. Grocery based distribution spaces that are also energy efficient will likely be a hot commodity in 2019.

Though cold-storage may take some time to warm up to, use this model to keep an eye out for other technologically advanced, new markets as they emerge. They will likely follow suit and create growth opportunities for industrial real estate in the new year.

Though predictions can change, it seems safe to say the outlook for industrial real estate remains positive in the new year. So, remember to keep an eye on the industrial market for 2019.