Marcus & Millichap

Beyond the Health Crisis: Industrial Special Report

May, 2020

Special Research Report

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Industrial Market Offers Durability in Uncertain Economic Climate

Health crisis bolsters outlook for warehouse and distribution space. As the nation attempts to reopen and recover from the COVID-19 pandemic, the industrial sector is likely to face fewer headwinds than some other commercial real estate segments. Warehouses and distribution centers are poised to benefit from the expansion of e-commerce activity during the economic shutdown as well as the buildup of inventories by retailers, suppliers and manufacturers following initial shortages. Disruptions to global supply chains are also likely to aid storage facilities near ports as exports wait for a smaller number of container vessels to arrive. Multiple solid demand drivers are likely to bolster the investment sales landscape as well. Well-capitalized buyers view warehouse and distribution properties with credit tenants as attractive investment options, creating an environment where investor interest outweighs available quality offerings. Markets with significant barriers to entry that recorded steady industrial tenant demand during the pandemic may generate the strongest valuations.

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