What Drives Demand for Industrial Real Estate?

Consumption is the central driver for the demand of industrial real estate however another factor is trade. In emerging markets, businesses progress from small, obsolete industrial real estate assets to more modern, innovative, offerings upgraded by cutting-edge features. Additional drivers are aesthetically attractive locales, changes in transportation routes and the emergence of same-day and next-day delivery services. 

Industrial, once considered a niche asset class, has grown in popularity, and become a necessity as consumers increasingly shop online. It is well documented that e-commerce is creating fierce competition among online and brick-and-mortar retailers. The vertical growth of e-commerce now requires the usage of distribution center sites in metro areas and even densely populated suburban areas to manage the high demand for next-day, same-day and 2-day delivery service.

The demand for industrial assets continues due to expansion and organic growth, a healthy sign that the economy continues to move forward – post Covid. Companies typically strive to remain in the same vicinity to maintain ease of access for employees and customers.

E-Commerce

E-commerce is a very strong contributing force driving demand for industrial real estate. Retailers in all sizes have an online presence and with advancing technology, more businesses can manage their operations and product storage and transportation.

Conglomerates like mega e-commerce giant Amazon have an ability to ship product direct to consumers (DTC) in specific metropolitan areas in just hours due to enormous strategically placed fulfillment centers near major cities.