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Home » Industrial and logistics segments to lead commercial real estate recovery

Industrial and logistics segments to lead commercial real estate recovery

But it will take years to return to pre-pandemic levels, mid-year real estate market outlook shows.

Industrial, logistics to leader commercial real estate recovery
August 6, 2020
DC Velocity Staff
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Industrial and logistics segments will help lead the recovery in commercial real estate activity following the coronavirus pandemic, but the outlook calls for a long road ahead, according to Los Angeles-based  real estate services and investment firm CBRE.

The firm’s Global Real Estate Market Outlook 2020 Mid-Year Review, released this week, shows that although the rebound for commercial real estate will lag that of the overall economy, a recovery will start this year and continue into 2021. Accelerating e-commerce activity will boost industrial and logistics markets, pushing it ahead of other business sectors, including office, retail, and hotel space. The multifamily housing sector will also lead growth, boosted by demographic trends that favor renting, according to CBRE.

“The blows that the pandemic dealt to the global economy this year were swift and significant, but we’re now set for a strong recovery starting in this year’s second half and extending through 2021,” Richard Barkham, CBRE’s global chief economist and head of Americas research, said in a statement about the report’s findings Wednesday. “Additional rounds of government stimulus are in the works to bolster economies, but let’s be clear, it will take years for commercial real estate activity levels to return fully to pre-pandemic levels. The recession likely will keep interest rates low for several years, which will maintain the flow of capital into commercial real estate. The arrival of a vaccine will greatly accelerate the recovery in real estate, but we can’t bank on that yet.”

The research underscores the importance of accelerating e-commerce activity to the warehousing and logistics sector. The authors wrote that a “surge in e-commerce will solidify industrial and logistics as a top-performing sector of commercial real estate, with modern, class-A, warehouses attracting most of the demand.” Additional demand will be driven by retailers adding more inventory to handle demand fluctuations and manufacturers diversifying their supply chains to reduce their dependence on China.

Although retail will lag industrial and logistics growth, key changes will help transform the way consumers shop, including curbside pickup services, which will become permanent options for many retailers, the researchers wrote.

KEYWORDS CBRE
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