WASHINGTON, DC—Net demand for industrial space could reach 250 million square feet this year, surpassing the near-record level of 233 million square feet set in 2013, according to a new report by NAIOP Research Foundation. There are a number of factors driving this trend, the study authors, Dr. Hany Guirguis and Dr. Joshua Harris, found, including the steady clip of e-commerce growth, the housing market’s recovery, the return of consumers to retail centers and the general pace of economic expansion. While this demand hasn’t overwhelmed supply, at least not yet, the potential is there. “I don’t think we have any areas in the country that are over industrialized,” Harris tells GlobeSt.com. “This is not a space that lends itself to over development.”
For retailers seek to compete with e-commerce stores and vice versa, this possible lack of supply may be alarming. The last thing a company that has to offer customers same-day delivery to stay competitive wants to hear is that nearby warehouse space can only be had for a premium, or worse, not at all. Fortunately, Harris adds, “industrial assets can be developed fairly quickly.”
Just as fortunately, these changing trends are not affecting building specs or requirements-at least not yet. The office market, as illustration, must stay on top of such developments as telecommuting, the demand for energy efficiency and greater inter-office collaboration. Warehouses, by contrast, while they are affected by such changes as same-day delivery or-possibly one-day-Amazon’s drone delivery proposal, do not need to retrofit or redesign their internal operations in response. When they do, Harris says, those changes can happen fairly easily although he adds, somewhat drily, “I am not sure what requirements a drone-supporting warehouse facility might have.”
“What developers are paying attention to right now is where those facilities need to be, not what they will be supporting,” he says.
Based on current demand trends, the “where” is almost everywhere. As NAIOP noted in the report fourth quarter 2013 industrial net absorption came in higher than expected at 70 million square feet and 2014 quarterly net absorption is expected to range between 60 and 65 million square feet.
2015 quarterly net absorption is predicted to range between 61.5 and 75.2 million square feet, with a mean forecast of 68.8 million square feet.