A Long-Lasting Industrial Boom…

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The rise of e-commerce has set off a boom in warehouse demand, sending vacancy rates lower and rents higher. "Industrial demand has skyrocketed,” says Garrick Brown, the national research director for Cassidy Turley, as quoted by The Tennessean  “We are tracking as much as 70 million square feet of demand for just e-commerce-related space in the U.S. marketplace over the next two years.”

And most of that is thanks to explosive e-commerce. Not only are industry giants – like Amazon – looking to beef up storage space, demand from brick-and-mortar retailers looking to compete online is driving growth, too.  Department stores finally embraced the Internet to stay competitive with the big boys.

That, as online retail sales “are anticipated to reach $370 billion by 2017,” notes commercial real estate firm, Cushman & Wakefield.  “E-tailing is the wave of the future. Sales from online purchases make up a higher percentage of the total sales for traditional retailers than ever before.”

That’s what I wrote in a report in August 2014…

And I still strongly believe growth is here to stay. In fact, throughout 2015, demand for warehouse, distribution and e-commerce fulfillment strongly exceeded supply in the United States…

It’s likely to continue into 2016.

In fact, according to an article on JOC.com, “Market conditions will remain strong and we see no sign of a change in the coming months,” said Craig Meyer, president, industrial brokerage, JLL Americas. “Instead, all indicators point to demand again outpacing supply in 2016 with a continuing drop in vacancy rates.”

“Although e-commerce fulfillment is driving some of the growth in the industrial real estate market, all segments are performing well, especially port-related developments that will benefit from completion of the Panama Canal expansion project in the spring of 2016.”

The national vacancy rate for warehouse, distribution, manufacturing and special-purpose industrial real estate in the third quarter of 2015 was 6.7 percent, which is a 14-year low, the JLL report stated. These conditions have resulted in an increase in speculative groundbreakings, consistent absorption gains, a healthy pool of active tenant requirements and continuing growth in rents.

Investors want to argue that commercial real estate can’t remain strong. But I don't agree…

I’d love to speak with you in person about the opportunities I’m seeing in commercial real estate. You can catch me in person at the Money Show.