The Future of Industrial Real Estate: Trends for 2022 and Beyond

The shock of COVID-19 has exposed the fundamental importance of industrial and logistics real estate to the world.

Key Takeaways

Digitalization, demographics and deglobalization will drive industrial market growth in 2022 and beyond
  • More industrial real estate will be needed to support forecasted double-digit annual growth in e-ecommerce sales.
  • Metros that realized the greatest adult population gains over the past five years have seen a corresponding boom in industrial development. Superregional distribution trends further impact this boom.
  • Geopolitical security concerns and continued global supply chain volatility are driving greater domestic manufacturing expansion.
Inventory modernization is still in an early stage
  • More than 70% of U.S. industrial space was built before the 21st century, and a full third of the inventory is over 50 years old.
  • The current construction pipeline measures 500 million sq. ft., nearly all set to deliver by 2023, signaling a potential future supply gap if speculative construction starts remain muted in 2022 due to prolonged disruption.
Firms are looking to take greater control of their supply chain to ensure resilience and control for cost
  • Business logistics expenditures increased to an average 11.0% share of total sales revenue in 2021.
  • 65% of midsize companies are changing business plans to include strategic stockpiling.
  • Since 2020, the 10 largest national retailers have acquired more industrial space than in the eight years preceding, combined.
Technology and automation adoption will accelerate to solve for challenging labor conditions, improve efficiency, and to meet corporate ESG goals
  • Warehousing and storage employment grew by 58.2% annually, and the industry is struggling with labor shortages
  • The warehouse automation market is expected to grow by 1.5 times by 2025 to $37.6 billion.
  • Fleet electrification, especially for last-mile delivery, has the potential to be most immediately deployable as firms accelerate green initiatives and distance from fossil fuels.
The future industrial market may expand to a “Low-Earth Orbit” economy
  • Asteroids circling the earth are composed of quintillions of dollars’ worth of minerals, including those in scarce terrestrial supply and key to critical chip production.
  • A record $17.1 billion in venture-capital investment flowed into space-sector firms in 2021.
Blockchain, cryptocurrency and digital tokenization will have increasing relevance to industrial real estate
  • The United States is now the number-one global location for Bitcoin mining, driving increased demand for industrial space and land.
  • 27 of the top 100 public companies already have a fully functioning, live service using blockchain technology.