Industrial May Be Solid Now But Leases Have Stalled and Rents are in Decline

A new report from the REIS team at Moody’s Analytics says to expect a delay before any slowdown in the industrial real estate market surfaces in the wake of the COVID-19 pandemic since leases are locked in and the economic slowdown’s impact on trade has thus far been ambiguous.

“But to be sure, the shutdown in the economy will still hurt the industrial sector, and significant new construction that had been underway will only compound the problem,” wrote Barbara Byrne Denham, a senior economist in the research and economics department at REIS. The report, subtitled “Calm before the Storm,” forecasts the completion of 111 million new square feet of industrial space coming online in 2020 despite construction delays caused by the coronavirus. That number is down from 148 million square feet of new industrial space completed in 2019, but could still contributed to a decrease in net absorption and lowered rental rates.