The U.S. industrial real estate market finished 2020 with a remarkably strong quarter, much of its resilience hinging on the acceleration of e-commerce, according to data from Cushman & Wakefield.
The fourth quarter was the strongest for absorption ever, accounting for 89.8 million square feet (83.4 million sq m). For the year, absorption was 268.4 million square feet (24.9 million sq m), up 11.4 percent from year-end 2019, Cushman & Wakefield reported.
Warehouse and distribution space proved to be the strongest segment propelling the industrial market, accounting for 267.4 million square feet (24.8 million sq m) of absorption for all of 2020.
Other notes from the Cushman & Wakefield economic outlook:
- Solid demand will continue. Net absorption is projected to exceed 200 million square feet (18.5 million sq m) in 2021.
- Supply is expected to continue to outpace demand in the coming quarters. Industrial supply is likely to produce about 40 percent more space than can be absorbed, bringing high-quality space to the market for occupiers to consider.
- New supply will place upward pressure on overall vacancy, with the rate rising 30 to 50 basis points to between 5.5 and 5.7 percent in the next couple of quarters.
- Asking rents will continue to rise, with year-over-year growth, but headwinds will come in the form of new supply and more modest demand, moderating the pace of overall rent growth.