Commercial brokerage firm Cushman & Wakefield in its recently released “North American Industrial Outlook” stated that market fundamentals in the North American industrial sector remained strong in 2020 despite pandemic-driven challenges and that its outlook for this year is that industrial real estate would remain one of the top performing sectors of the commercial real estate market.

The tailwinds of e-commerce and heightened focus on supply chain resiliency will certainly keep the market in an upswing with record construction and new all-time high rental rates on the horizon, the report states. Potential pandemic headwinds and ongoing tensions with international trade suggest what the report authors characterize as “an interesting ride for the North American industrial market over the next two years.”

The forecast for North American industrial absorption from 2021 to 2022 is a healthy 481.3 million square feet. New supply—which has surpassed demand two years in a row—will maintain this trend over the next two years. New deliveries are projected to reach 697.3 million square feet of product from 2021 to 2022.

Nonetheless, North American vacancy will remain low, ending 2022 at 6.2%—an increase of only 130 basis points over year-end 2020. Despite the forecasted uptick, North American vacancy will remain nearly on par with its 10-year average (2012-2021) of 6%. Average net asking rents for classes of industrial product will rise to a new nominal high of $6.97 per square foot at year-end 2022, according to the report released earlier this month.

Supply-side constraints, such as onerous municipal approval processes, will continue to constrain supply growth in Canada where overall net rents will remain the highest in North America at $10.19-per-square-foot by the close of 2022.

Key Takeaways from the report include:

• Industrial demand is booming, but so is supply.

• Pent-up demand story forming—expect economic surge in back half of 2021.

• Fundamentals to continue generating solid rent growth throughout the next few years.

• Global trade expected to rise as economic growth accelerates and trade tensions ease, boosting demand.

Cushman & Wakefield concluded its report by predicting: “The necessity to further accelerate the adoption of e-commerce within the economy insulated the industrial real estate sector from the downturns that befell the hospitality, office and retail sectors. This ramping up of the industrial sector to support e-commerce growth will benefit industrial real estate in the near- and medium-term but may also lead to slower growth in 2022 as the sector compensates for overshooting due to the partly unforeseen spike in demand.”

The report continued, “Given that the global economy is expected to be firing on all cylinders by that time, demand from other segments of the economy is likely to accelerate and offset any e-commerce-specific loss of momentum. Thus, the stage is set for a healthy and evolving demand backdrop.”

To access the full “North American Industrial Outlook” report, go to: https://www.cushmanwakefield.com/en/united-states/insights/northamerican-industrialoutlook