Industrial Real Estate: Why Demand for This Asset Class is Growing

 

There has been much talk about Industrial Real Estate lately, and for a good reason. This asset class has experienced rapid growth within the past five years, with no signs of slowing down. Industrial properties are in demand because they can be used for many purposes, such as manufacturing or storage; this makes Industrial Real Estate an attractive investment opportunity.

In light of recent circumstances, the industrial real estate industry has demonstrated itself to be more resilient during a recession than other industries. A new group of participants from these groups is participating -> Financial Institutions are now entering the market with their own strategies and offerings.

The industrial sector is growing because of technological advances that offer new ways to meet the world's growing energy needs, an increase in consumer spending power. The growth of online grocery delivery, the construction of last-mile logistics systems, and an increasing need for warehouse space and labor are all examples of these.

A surge in online grocery delivery

Online grocery penetration is expected to grow from 2% in 2020 to 15% in 2023. This growing interest is being fueled by the premiumization of, The growth of fulfillment centers is becoming a viable option to protect employee productivity as online grocery delivery increases.

As the number of customers who conduct online grocery purchases grows, so does the competition among grocers. As a result of increased demand, it is inevitable that more goods will have to be stored in warehouses in order to keep up with supply. According to CBRE, more supermarkets will need to move cold-storage operations from their stores into free-standing facilities. To stay on top of order fulfillment, warehouses should use refrigerated trucks to save time and money.

Last-Mile Delivery Facilities Construction

The yearly total of e-commerce deliveries has more than tripled over the last five years, according to JLL's Urban Infill study. However, new urban industrial infill development remains fairly stagnant. To compensate for the dearth of continuing industrial development, commercial real estate properties are being built. Last-mile fulfillment centers, such as vacant big-box retail and office spaces, are becoming more common.

The end-user is able to order a wide range of goods because the last mile distribution area acts as a center for products that allow items to get. The need for faster delivery has grown dramatically, prompting a need for last-mile industrial inventory distribution facilities.

Last-mile facilities in major cities with larger populations now demand greater rents than traditional distribution centers in more rural areas due to extremely tight vacancies. As a result, investors are broadening their search for last-mile industrial goods to secondary and third markets from their prior target on developed areas near major.

Warehousing space and labor will be in greater demand.

In 2018, demand for manufacturing space in the United States had consistently exceeded the available supply. A consumer's desire for a product is impacted by the e-commerce impact on the supply chain. Recent market changes may be responsible for today's increasing demand for warehouse space. CBRE predicts that the disruption in the supply chain will create a Demand for industrial space is on the rise, from 400 million to 500 million square feet.

As the demand for warehouse space rises, so will the demand for skilled employees. In March 2019, the Transportation, Warehousing, and Utility sector had 345,000 job openings. According to CBRE estimates, an additional 226,000 warehouse employees will be needed in 2018 and 2019 just to maintain pace with demand.

One of the most promising industries in real estate is industrial real estate. Top-performing sectors for CRE in recent To prevent its spreading to other species, you must first know how it spreads. With more internet purchases, warehouse space and rapid deliveries will continue to rise. If the long-term supply and demand for industrial real estate are still being affected by behavioral changes, There are a lot of exciting possibilities for real estate investors and developers in this space.

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