While many businesses were forced to shut down due to the coronavirus global pandemic, the industrial sector has found the opposite direction. Industrial sites in New York had an unexpected growth while COVID-19 cases continue to increase in the United States.
This sudden demand for industrial spaces was brought by the influx of packages being delivered as people stay at home and uses online shopping more than ever.
According to Rob Kossar - vice chairman of global real estate company JLL, their company had an unforeseen growth during the first three months of the pandemic compared to the business's last ten years.
Mr. Kossar explained that the world health crisis forced people to shop online and even convert non-online shoppers into one.
"From a business perspective, for industrial, it has caused an incredible boom," Mr. Kossar said, as reported by the New York Post.
According to CBRE Group data, New York City's industrial real estate recorded a strong first quarter in 2020. All thanks to the demand for third-party logistic business space and storage for retailers.
Although the city has become the epicenter of the COVID-19 pandemic during that time, the quarterly leasing velocity for warehouse and distribution properties was still high.
The report shows the industrial space availability remains at 8.5% while the industrial site vacancy decreased by 5.1
Supply and Demand
Before the coronavirus pandemic, only 11% of retail sales were made online. But by the end of 2020, these numbers were doubled and still expected to move up by 30%.
According to the International Council of Shopping Centers, almost 88% of 194 million shoppers in the US ordered goods online during the Thanksgiving weekend alone.
The increase in online shopping traffic resulted in the need for "last-mile" facilities or larger spaces where suppliers can process and shop goods closer to residential areas.
The last mile facilities serve as the last stop of the stuff people ordered online; it is where the packages were sorted and redistributed to smaller vehicles that will deliver the orders in the buyer's front door.
Because of the advice to stay at home, the last-mile facilities became the hottest sector in 2020. Mr. Kossar's company alone is expected to acquire an additional one billion square feet of an industrial site in the US, 30-40-square-feet of which will be in New York City by 2025.
"Since everyone wants their products delivered the same day, facilities are needed closer to the neighborhoods," Mr. Kossar explained.
Currently, New Jersey, Queens, and Brooklyn are the fast-rising areas for industrial sites.
Other Businesses Expanding Industrial Sites
Online retail giant Amazon has recently transferred their office building to a neighborhood distribution hub with a pickup storefront.
On the other hand, North River Company allotted 100,000 square-feet last-mile facilities with loading docks for distribution and offices.
Meanwhile, Innovo and investment advisory firm Atalaya Capital and Hong Kong-based property developer Nan Fung Group are looking into building a five-story building for industrial and studio use.
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