Back to Basics: How Coronavirus is Affecting Industrial Real Estate

Real estate throughout the country is taking a huge hit as COVID-19 continues to spread around the globe. While we won’t fully know how deeply coronavirus will impact the industrial real estate market yet, there are small glimpses to how the demand for industrial real estate might change going forward. The spread of this virus is certainly an immediate, and hopefully short-term, threat to human and economic health, but there may be a long-term opportunity for the industrial real estate space to experience a period of growth.

The Short Term

In the immediate future, things might look a little bleak for the industrial market. The truth is, there will be fewer construction projects. COVID-19 has disrupted all development projects for the foreseeable future. Not only are contract workers unable to work, but we are also seeing major interruptions in supply chains, especially from overseas distributors like China. Unfortunately, business will probably only slow down more before things get better. But there is hope in the long-term future in the industrial real estate market.

The Long Term

Eventually, the pandemic will end. Once it does, the likelihood of a huge boom in the industrial market is very high. There are three specific ways that the effects of COVID-19 could boost demand for the industrial market.

Space for Inventory

Right now, retailers are suffering. Not only are everyday household items at an all-time low, but industrial supplies are low as well. As retailers begin to adjust to COVID-19, they will require vendors to keep a greater stock to meet the immediate demands of their consumers. This is where warehousing space will be in greater demand to address the stocking needs of retailers.

New Supply Chain Avenues

Any supply chains running through China have been interrupted at this point. While those interruptions might be a blow to companies that have relied on that, this creates an opportunity for companies to find new supply chain avenues. Companies should invest time in finding a new supply chain solution in other countries or even the United States. By using a US-based supply chain solution, your company can begin to drive demand in the US and help to stimulate our economy again.

E-Commerce

As people are social distancing and self-isolating, e-commerce sales will increase. Because the general public is being confined to their homes, they are having to make purchases online, which will continue to drive demand and change in the industrial real estate market. Purchases from retailers will continue to push for an increase in warehousing services. This entire experience could usher in a new wave of increased online shopping that we haven’t seen before. Warehouse development will be a crucial need in the years going forward to meet the needs and demands of e-commerce sales.