#40 – Inside Our Industry – A Tale of Two Products: Office vs. Industrial

Our property portfolio is primarily industrial, with a handful of office properties in key markets. The following from ConnectCRE that details Transwestern’s quarterly report on commercial real estate shines a bright light on the industrial sector, while the office sector is still lagging, but showing some positive signs, as we hopefully wind down the COVID-19 era. We will be watching as we work through 2021…

A Tale of Two Products: Office vs. Industrial
by: Lisa Brown, March 16, 2021

While COVID-19 caused a national economic slowdown, the commercial real estate industry has felt the effects unevenly across geographies and property sectors. Fourth-quarter market reports from Transwestern Real Estate Services (TRS) illustrate that while the office sector is suffering its worst downturn since the Great Recession, the industrial sector is surging to meet the demand uptick for logistics space fueled by pandemic-related trends.

The economy suffered significant job losses in the first half of 2020 but recovered 66 percent of office-using jobs lost since March 2020. Tenants are delaying major real estate decisions until there is greater clarity on vaccine distribution and safe workplace return timelines. Despite many companies accommodating a more flexible work environment, Transwestern CEO Larry P. Heard expects businesses to return to the office post-pandemic to fuel collaboration and gain a competitive advantage.

A 44 percent boost in online shopping during 2020 caused a sharp uptick in e-commerce activity and continues to intensify demand for industrial space. Additionally, manufacturing ended the year at a six-year high.

Some 444 million square feet of industrial space, including spec, is currently under construction. With continued demand from investors, occupiers and logistics companies, Heard says that the only headwinds facing the industrial market are a lack of skilled workers and new construction to meet demand.

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