NAIOP Forecast: Strong Growth in Demand for Industrial Space
A new industrial space demand forecast, published by the NAIOP Research Foundation, projects total net absorption in 2021 to be 314.9 million square feet, with a quarterly average of 78.7 million square feet. In 2022, net absorption is projected to be 231.6 million square feet, with a quarterly average of 57.9 million square feet.
According to the report, the industrial sector continues as the leading property type, due in large part to increased demand for e-commerce during the pandemic and the distribution infrastructure needed to support it. Net absorption rates in industrial reached their highest levels since 2000, with higher rents and low vacancy rates.
“When the economy stabilizes, fundamentals will once again drive market behavior, and net absorption rates will likely mean-revert toward long-term growth trends,” according to the report. “As more industrial tenants secure the space they need, net absorption rates will gradually dissipate in the coming quarters to levels that will likely be only slightly higher than economic fundamentals would have predicted before the pandemic.”
