Real estate is an ever-changing climate and things are always moving and evolving. For instance, there’s a robust demand for space in the industrial market which is expected to continue to bolster the U.S. commercial real estate sector over the next few years, according to BBG, a national due diligence firm.

That prediction is based and revealed in a news release on expectations of unwavering demand amid limited availability of space at warehouses, distribution centers, and other buildings.

One recent industry report said an estimated 850 million square feet of industrial space will be added to the market over the next five years.

Across the country, strong tenant demand has resulted in industrial vacancy rates hitting historic lows, hovering around 5 percent in the second quarter of this year.

The industrial market boom has been attributed to a healthy economy, particularly the torrid pace of growth in the e-commerce sector. According to census data, e-commerce sales grew 14.4 percent annually between 2012 and 2018.

Many U.S. cities have seen rapid growth in this commercial real estate sector. One of those cities, Charlotte, N.C., serves as a stellar example of this trend.

Ballooning population growth in Charlotte and elsewhere across the state and a growing reputation as a major e-commerce hub has contributed heavily to the city becoming one of the country’s top spots for industrial real estate growth.

For instance, Amazon plans to open a $200 million robotics fulfillment center in Charlotte later this year. The Charlotte facility will be among three other Amazon facilities in the region, including a fulfillment center in nearby Kannapolis that opened last year, according to the release.

BBG CEO Chris Roach commented: “The industrial market has built tremendous momentum as a result of several factors: a resilient U.S. economy, tightening availability of space, the ongoing expansion of e-commerce businesses, and a steady influx of investment in this sector. We anticipate that this market will continue to demonstrate strength and play a vital role in the overall growth of commercial real estate.”

Co-worker space demands growing

Demand for co-working spaces is also expected to show continued strong growth over the next few years, as more younger workers favor flexible office space over traditional office settings, according to BBG.

Flexible office space has quickly become a major disruptive force in the office real estate market. The co-working office trend has drawn mostly a younger generation who finds this an appealing workplace alternative in today’s sharing economy.

According to industry reports, there are an estimated 35,000 co-working spaces worldwide with a market value of an estimated $26 billion. And the number of the nation’s flexible office spaces is expected to grow at an annual rate of 6 percent until 2022.

Co-working spaces accounted for more than 25 million square feet in the 30 top US markets. Manhattan ranked the highest in flexible office space (12.5 million square feet), followed by Boston (3 million square feet) and Seattle (2 million square feet).

The co-working office trend also has allowed some investors and owners to raise their property values by dedicating a certain amount of square footage to flexible office space. One industry survey said nearly 40 percent of buildings that included co-working space achieved a higher value than the average for office buildings in their market.

“The proliferation of co-working office buildings reflects a monumental change in the way today’s society views the workplace,” said BBG CEO Roach via the release. “Flexible office space gives people the opportunity to meet and interact with others who have different skills and backgrounds that may not be otherwise available in a traditional office environment. In addition, it creates new opportunities for building owners and investors who could possibly generate more value from properties in high-growth areas.”

Source: BBG