While most commercial real estate sectors are suffering from risingvacancies and falling rents during the pandemic, industrial keeps outperforming itspeers.
Buoyed by continuing strength ine-commerce, the warehouse/distributionvacancy rate was unchanged in the Q3,positing positive net absorption for the40th quarter in a row, according toMoody’s Analytics. The vacancy rateremained unchanged at 10.5% in the Q3but increased from 10.1% year-over-year.
Meanwhile, flex and R&D space didn’tdo as well in the quarter with the vacancyrate increasing by 0.2% to 10.3%, while itincurred negative net absorption. .
“In short, the warehouse/distribution
sector is withstanding the pressures from
the pandemic, while the flex and R&D
Moody’s Analytics. “With two full quarters
into the pandemic and no end in sight,
these trends of a flat warehouse and dis-
tribution and weakness in flex and R&D
should continue over the next quarter
and next year.”
Moody’s Analytics projects that indus-
trial vacancy rates will rise to 11.8% in
2021 and that the sector will incur its
most significant drop in effective rents in
10 years, down 4.5% in 2021.
The downturn shouldn’t last long,though. Moody’s predicts that onlinecommerce will drive a rebound in theasset class. As vacancy rates declinesteadily over the next five years, effectiverents will rise by 1.4% in 2022.
Now that many corporations have gone largely remote and found that theirworkforce remains productive, the technology sector in particular appears to beembracing the concept for the long-term.
In a survey by Savills North America ofseveral hundred technology office tenants, a staggering majority of firms, 94%,said they expect remote work, at least afew days a week, to be normalized at theircompany in a post-vaccine environment.
The survey comes amid daily news oftech companies making announcementsof future, office-light plans. Microsoft, forexample, has announced that employeescould permanently work from home, andthis past July, Google extended its allowance of employees to work remotely untilat least next summer.
ENVISION A LARGELY
INDUSTRIAL REMAINS 2020’S
Most retail leases require that retail- ers remain open for business, but
in the time of the coronavirus, lease
requirements have entered a gray area.
Many COVID- 19 restrictions have put
retailers in a compromising position,
and while some have found ways to
remain open and cope, others have
decided to close until the restrictions
allow for normal—or at least closer to
normal—business operations. So, what
rights do landlords have in this deci-
“Tenants whose operations are significantly affected by stringent Covid-19 restrictions will want to reserve theright to stay closed until such restrictions are lifted, even though the shopping center requires them to be openfor business,” says Gary Glick, a partnerat Cox, Castle & Nicholson LLP.“However, landlords should be able to
TENANTS OPEN THEIR