|This report was provided by real estate services firm CBRE
Fueled by e-commerce growth, annual net industrial absorption will total more than 333 msf by 2022, leading to annual rent growth of 5.7%, according to the latest CBRE estimates. This is more than triple the previously forecast demand, based on new metrics that CBRE Economic Advisors (CBRE EA) has developed using e-commerce data.
In the COVID-19 era, e-commerce is fueling industrial demand more than ever, so basing forecasts solely on traditional employment-based metrics is no longer enough. By incorporating e-commerce data into its industrial forecasting models beginning in Q1 2020, CBRE EA is now able to more precisely forecast industrial rent, availability, absorption and construction.
The COVID-19 pandemic has resulted in significant gains in e-commerce’s share of total retail sales, which should further stimulate industrial demand and provide a short-term buffer to a more severe economic downturn.
The Census Bureau reports that while every other major category of retail spending declined, nonstore retail sales rose by 9.5% in April and by 9.0% in May. Nonstore’s share of total retail sales jumped to 19.2% from 15.0% in April, illustrating e-commerce’s prominence during the pandemic. Although this share fell slightly in May when many traditional retail stores reopened, it remained considerably higher than before the pandemic.
In its Q1 2020 forecast, CBRE EA assumes that much of the gain in e-commerce’s share will remain in the post-pandemic economy and online shopping will continue to gain additional share at a more normal pace. This has important implications for industrial real estate demand over the long-term and will contribute to strong absorption.
This report was put together/overseen by the following CBRE executives:
Richard Barkham, Ph.D., MRICS
Global Chief Economist & Head of Americas Research
CBRE Americas and Global Research
Chairman & Senior Economic Advisor
CBRE Americas Research
Global Head of Industrial & Logistics Research
Industrial & Logistics Research
Executive Managing Director
Americas Industrial & Logistics Leader
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