As a result of all non-essential businesses being closed to slow the spread of COVID-19, the new normal for many industries will be quite different. Perhaps none more so than industrial real estate.
New research from CBRE shows that leasing activity within the Northeast corridor decreased during February and March, but posted a significant uptick in activity during the month of April.
According to findings by CBRE, retailers looking to quickly expand e-commerce operations, traditional e-commerce companies, and third-party logistics (3PL) firms are driving leasing activity. COVID-19 and its associated quarantines are creating new online consumers, which will further increase e-commerce’s share of total retail sales.
In the northern/central part of the state, the e-commerce demand for warehouse space accounted for 43 percent of industrial leasing activity at 1.16 million square feet while 3PLs claimed 19 percent. Along the Pennsylvania Interstate 78 and 81 corridors, 3PLs comprised about 46 percent of leasing activity, while e-commerce accounted for 27 percent. This activity points toward stable industrial markets within the Northeast during the current crisis.
Looking forward, e-commerce will continue to be the biggest catalyst for both demand and innovation in industrial real estate over the next cycle. Increasing demand for goods bought online, especially food, will fuel the need for modern distribution facilities at a pace much higher than the previous cycle.