LightBox RCM Investor Sentiment Report: Industrial Remains Top Choice for Investors

CARLSBAD, CA (March 8, 2022)—Investors continue to focus on the industrial sector as a top asset class, despite headwinds from rising inflation, construction costs, and shortages of labor. The 2022 Q1 LightBox RCM Investor Sentiment Report found that 72% of industry professionals expect that overall commercial real estate investment activity will increase over 2021 volume – and that industrial will play a big part in that activity.

U.S. industrial property sales reached $389.9 billion between 2019 and 2021, an amount that exceeded the cumulative total for 2014 through 2018 by more than $24 billion, according to Real Capital Analytics. And, sales volume in 2021 exceeded $100 billion for the third consecutive year, reaching a record $167 billion. IN 2022, Large logistics and warehouse portfolio trades will continue to drive significant activity, as investors try to quickly scale up and gain a footing in the industrial sector.

“The industrial market experienced a stellar year in 2021 and is representative of the upward trajectory in the K-curve which illustrates that conditions and outcomes are good for some, but not necessarily for all. I expect 2022 will be more of the same, said Geoffrey Kasselman, SIOR, LEED AP, Partner and Senior Vice President, Workplace Strategy at CRG, based in Chicago. “In fact, we’ll likely see more of the same through 2023 and 2024.”

The report also noted:
• Inflation will impact a developer or investor’s buying power in 2022. Commodity material prices are increasing due to supply and demand issues. Slower delivery times are extending the cycles of planning, development and construction. “We may see an interim decline in new construction deliveries in the second half of the year, due to a shortage of materials, or the delay in getting them to the job site,” said Kasselman. “If you need to occupy space at the end of 2022 you may be slugging it out for the best available options.”
• There is a notable shortage of readily developable “speed-to-market” land sites for industrial property, from coast to coast. The combination of land shortages in key markets across the U.S., coupled with changing dynamics in suburban office markets is creating unique opportunities for developers to acquire underutilized corporate campuses and reposition them for high end industrial use and last mile facilities.

“Today’s capital markets climate may be one of the most dynamic and intricate we’ve seen in many years,” said Tina Lichens, Senior Vice President, Broker Operations, LightBox. “Investors are navigating a complex environment with significant opportunities as well as economic headwinds that are dictating a more nuanced approach. We expect to see subtle shifts in investment approaches and strategies as a result.”

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