Industrial Demand Sets Records as Economies, Shopping Centers Reopen
Companies Leased More Than 300 Million Square Feet of Warehouses in Second Quarter
National demand for warehouses and other industrial buildings shattered sales, leasing and construction records at mid-year as people flock to buy goods online and, increasingly, at physical stores as the pandemic wanes.
Tenant deals, sales and construction recorded all-time highs in the second quarter, with total leasing almost certain to exceed 300 million square feet nationally for the first time, according to CoStar. Show Full Story
Leasing by total square footage was up at least 30% to 40% in the quarter from pre-pandemic levels in the nation's logistics and manufacturing hubs, "stronger than what many of the largest U.S. markets can even handle," Adrian Ponsen, CoStar's director of market analytics, said in a video presentation of second-quarter 2021 data.
Shoppers are buying furniture, sporting goods, clothing and other items at record levels with cash from government stimulus checks and savings at both online and at brick-and-mortar stores, Ponsen said. The need to ship and store goods has caused a mad scramble by landlords and developers to buy, lease and build logistics space as economies across the United States reopen more than 16 months into the pandemic.
Signings have more than doubled in such smaller cities as Las Vegas, Huntsville, Alabama, and Scranton, Pennsylvania as they skim demand from more established distribution hubs such as Southern California and central Pennsylvania, where developers can’t build warehouses fast enough, he added.
U.S. builders set quarterly records for the amount of space under construction, surpassing 400 million square feet in a second quarter for the first time in history, Ponsen said.
Leasing increases paired with industrial rent growth exceeding 5% in most large cities caused investors to shell out at least $29 billion to buy property, also the highest total ever recorded at the end of a second quarter, he added.