The industrial real estate market has been dynamic, shaped by shifts brought on by the pandemic and subsequent adjustments over the last two years.
Currently, the market is experiencing a decrease in net absorption that has been underway over the last two years, according to NAIOP’s Industrial Space Demand Forecast, First Quarter 2024.
However, this decline has not been unexpected given the explosive growth in demand during the pandemic, which was due in part to the surge in e-commerce and related need for logistics and data center properties. NAIOP says the current “correction period” should result in a return to balance in the industrial space.
While actual demand was lower than expected in Q1, NAIOP forecasts it will hold relatively steady throughout 2024, with the full-year forecast for industrial absorption sitting at 62.8 million square feet (which is about twice the area of New York’s Central Park).
At the end of 2023, the national availability rate for industrial space sat at 7.1% which was higher than the post-pandemic low of 4.6% in Q2 2022.
NAIOP suggests a return to normalcy is due to a convergence of supply and demand that it says should lead to “a stable and gradually expanding national market” over the next two years.
Barring unforeseen setbacks, the NAIOP forecast paints a picture of a stable, gradually expanding national market for industrial space in which adaptation and agility will remain key for stakeholders in this sector.
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