March 2, 2023

The NAIOP Research Foundation has published the NAIOP Industrial Space Demand Forecast for Q1 2023.

Key Takeaways

• Despite rising interest rates and growth in the supply of new space entering the market, the outlook for industrial real estate remains bright as supply chain conditions steadily improve. Low vacancy rates will continue to support growth in rents and property values.
• Supply chain issues that hindered the delivery of construction materials through western ports have been mostly resolved, but demand for industrial space around these ports continues to exceed supply, contributing to demand for space in inland markets.
• Demand for e-commerce is expected to grow as consumers continue to expect quick home delivery and traditional retailers increasingly adopt omnichannel distribution. These trends should continue to create demand for last-mile distribution facilities, particularly near dense and growing areas.
• The forecast predicts that quarterly net absorption of industrial space will average 79.0 million square feet over the next two years. Total net absorption for 2023 is forecast to be approximately 310 million square feet, and full-year absorption in 2024 is forecast to be around 323 million square feet.