M id A tlantic Real Estate Journal — Spring Preview —April 24 - May 14, 2020 — 5C
www.marej.com
I ndustrial
By Scott Perkins, SIOR, CCIM, NAI Hanson Industrial sector primed for post-COVID-19 new normal
A
lthough we are still waiting for the full im- pacts of the COVID-19
Although the growth of e- commerce had been significant in recent years, COVID-19 has led to a substantial increase in the adoption of online shopping for essential goods like grocer- ies. Millions of Americans are now learning how easy it is to shop online. Once the crisis is over, many once-reluctant online shoppers will now begin to adopt online shopping as essential components of their day-to-day lives and once ca- sual online shoppers will only increase their utilization of the services. With these increases in in- ventory and online shopping in
and fragile international sup- ply chains have been exposed by COVID-19 resulting inmany
Additionally, companies will look for opportunities to add smaller and more numerous
our post-COVID-19 world, once the economy opens up again, I expect that the demand for industrial space will only in- crease. Although demand will remain high in the northern and central New Jersey mar- kets, along the New Jersey Tpke., their high pricing and limited availability has primed the I-80 corridor and similar secondary and tertiary mar- kets for significant growth as industrial leasing and develop- ment markets move forward following this crisis. Scott Perkins, SIOR, CCIM is Senior Vice President at NAI James E. Hanson.
outbreak to become ap- parent, it is obvious that it will have far-reaching implications for our indus- try. Quaran- tines and so-
Seemingly overnight, COVID-19 has completely rewritten that script, forcing the commercial real estate industry to reassess the long-term trajectory of the industrial market.
industrial users having either too many or too few goods, causing disruptions throughout their supply chains. Moving forward, I expect companies to increase their available inven- tory with subsequent increases in their industrial square foot- age by around 10-15 percent.
warehouses near population centers to more efficiently service these areas. This will ensure they can better com- pensate for future disruptions that, although not as severe as COVID-19, could hurt their ability to get products into cus- tomers’ hands.
Scott Perkins
cial distancing have already caused much pain to the hos- pitality and retail sectors and the lasting effects will linger long after COVID-19 subsides. On the flip side, the short- term impacts to the industrial sector have been less dire but changes to supply chains and consumer habits brought on by COVID-19 could reshape the sector in the next several months. Over the past several quar- ters, the industrial sector faced record-high demand with lim- ited supply causing vacancy rates to remain very low and a measured supply of new construction continuing to appear across northern and central New Jersey. As we entered 2020, it appeared we were on track for more of the same. Seemingly overnight, COVID-19 has completely re- written that script, forcing the commercial real estate indus- try to reassess the long-term trajectory of the industrial market. Much of that trajectory will be shaped by the broader econo- my. Unfortunately, as our stock market tumbles and economic activity grinds to a halt, I know it is easy to make comparisons to the Great Recession. Follow- ing that recession and evapora- tion of liquidity, it took the in- dustrial sector quite some time to recover, with low occupancy and stalled construction proj- ects all over the nation. This downturn is much different though. Just a few weeks ago, all economic indicators pointed to continued strength in our broader economy. Although the immediate impacts have been severe, the shape of the recovery, whether V-shaped, U- shaped or the dreaded L- shaped, will depend on when the economy can be reopened and how well business can handle this disruption. There are a couple of trends that will work together to shape the industrial sector in the quarters to come. The deficien- cies in just-in-time inventory
Recent NAI Hanson Transactions
78,650 SF Sale One Pond Road Rockleigh, NJ
55,000 SF Lease 357 County Avenue Secaucus, NJ $3.6MM Mortgage 835 Lehigh Avenue Union, NJ 23,875 SF Lease 155 Route 46 Fairfield, NJ 22,526 SF Lease 105-111 S State Street Hackensack, NJ
NJ Offices: Teterboro | Parsippany | naihanson.com | Member of NAI Global with 375 Offices Worldwide | Brokerage • Property Management • Corporate Services • Financing • Logistics Tenant Representation • Cold Storage • Investment Services
FOLLOW US!
Made with FlippingBook Proposal Creator