Source: Globe Street
While the US economy has dangerously slumped for much of the year, demand for industrial space has only continued to increase.
Net absorption for bulk industrial space was up 51% to 79.8 million square feet in the first half of the year, according to Colliers. At mid-year 2019, 52.8 million square feet had transacted.
The pandemic drove these gains as e-commerce surged in the first half of the year. E-commerce accounted for 16.1% of retail sales in Q2 2020, which was an increase over the 11.8% in the previous quarter, according to the US Department of Commerce. That was a record for online shopping.
Overall, the industrial market posted 104.5 million square feet of occupancy gains at mid year 2020. The Big box segment claimed 79.8 million square feet, which was 76.3% of all net absorption in 2020.
As other commercial real sectors struggled in the first half of the year, vacancy, transaction volume and product under construction remained relatively flat across the country for bulk industrial space. According to Colliers, asking rents and net occupancy surged in the sector during the first half of 2020.
Cap rates were at a steady 5.6% midyear, while the industrial sector was the only CRE asset class to positive year-over-year growth at midyear, according to Real Capital Analytics. New development is also flourishing in the sector, with 170.7 million square feet under construction at the end of the second quarter of 2020.