Forecast: 1 Billion Square Feet of Industrial Real Estate Needed By 2025

The pandemic has been different for each real estate sector. Housing was hot but the commercial sector was a bit dull. 

The industrial segment, on the other hand, stayed resilient against the challenges faced by the commercial sector. 

When a pandemic was declared in March 2020, commercial establishments were ordered closed. Understandably, commercial real estate was hit harder by the pandemic than the other segments.

Residential real estate, on the other hand, was quick to bounce back. It was only quiet for a couple of months after the declaration of the pandemic. With work-from-home arrangements, people were suddenly needing bigger homes. 

With establishments closed, people turned to e-commerce. While they no longer go to the establishments, the companies still need a place to store products. 

Change in buying practices

Even if the United States is closer to achieving herd immunity, people have already been exposed to the convenience of e-commerce. 

E-commerce is nothing new, by the way. It has always been there. As early as 2015, 10% of U.S. retail transactions were from online purchases. 

It also looks like it’s here to stay. With the convenience it provides, people who didn’t believe in online shopping before have been converted. 

E-commerce actually provided a lifeline to small businesses that had a hard time coping with the loss of clientele due to the pandemic. 

But while these businesses had to close their shops, they still needed a place to keep their supplies in order to continue operating the business online. 

Of course, a storage space or warehouse is not the only industrial real estate out there. Manufacturing companies continue to need space and the larger ones are looking for areas to expand. 

A recent Forbes report states that the country will need an additional one billion square feet of industrial real estate to cope with the demand. 

Good for the economy as a whole

The demand for industrial real estate could balance out the adverse effects of the pandemic in the retail and hospitality industry. 

Industrial real estate investors are having a field day with the demand. But it’s also bringing in other benefits. 

For one, more jobs will be opened. 

According to a recent Gallup report, about 30 million Americans lost their job during the pandemic. Also, 41% of Americans were working less.

If more industrial logistics hubs will be opened, there will be opportunities for the 30 million unemployed people to land a job. 

The direct effect of more jobs is more jobs. With people having income, they are most likely to buy again. 

They have the capability to shop and eat in restaurants again. As a result, retailers can start expanding and small restaurants could open again. 

As for malls that lost tenants due to the pandemic, they could try converting from the commercial to the industrial sector. 

The location of malls make it truly attractive for conversion to industrial real estate. It’s very accessible and it always features a large parking space. 

It’s very clear that industrial real estate is on the up and up. People should start looking at ways of taking advantage of this real estate sector.