Carlsbad, CA (Oct. 20, 2021)—The robust growth in e-commerce during the pandemic is fueling an unprecedented race for space in the industrial sector and pushing investment sales activity to record levels. According to a newly released LightBox-SIOR Industrial Investor Sentiment Report, vacancy rates are below 4% in many markets and 2021 investment sales activity is expected to exceed the record $120 billion set in 2019.
According to the report, investors remain bullish on the outlook for the industrial sector going into 2022, with 71.7% of survey respondents expecting investment levels to increase and 49% of those respondents predicting a significant increase. Another 24.3% predicted the levels will remain the same. Only 4% of respondents expect a decrease in activity. Industry research shows that mid-year 2021 industrial sales volume reached nearly $52 billion, with the average sales price rising nearly 25% year-over-year to $120 per square foot.
While the industry is experiencing notable headwinds from supply chain disruption, rising construction costs and labor issues, investors remain bullish on the sector’s long-term outlook. “As e-commerce continues to transform our economy, investors are looking for every opportunity to gain entry or expand their positions in the industrial sector,” says Tina Lichens, Senior Vice President, Broker Operations, LightBox. “The industrial sector is attracting significant amounts of domestic and foreign capital and is well-positioned to withstand supply chain disruption or other volatility that might occur.”
The report incorporates views from leading commercial real estate investors, brokers, and development professionals across the U.S.
Key findings of the 2021 LightBox-SIOR Investment Sentiment Report include:
• E-commerce will continue to drive industrial space usage for the foreseeable future. E-commerce sales grew by 40% over the past year and are expected to reach $1.1 billion by 2025.
• Rents are expected to rise by 5% to 7% or more in 2022. Approximately 60% of survey respondents predicted rental rate increases of more than 5%, for example. Occupier demand, led by retailers and logistics providers, will push rents higher; rates could reach double digits in many markets. Asset pricing could increase the same or more. Among the top markets for year-over-year rent growth in 2021 are Northern New Jersey (33.3%), Inland Empire (28.3%), Philadelphia (25.9%) and Nashville (20.3%).
• Industrial construction continues at a strong pace, with 151.5 msf completed in the first half of 2021. The development pipeline is 410 msf, with 60% of it preleased. Among the top markets for construction are: Dallas Fort-Worth, Atlanta, and Chicago.
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