How to analyze industrial real estate supply and demand

Author Ivan Smiljanic Read bio
Tags: industrial real estate supply and demand
Date: October 19, 2020

We’d say it is pretty essential for commercial real estate professionals to have a transparent picture of forecasts for industrial real estate supply and demand. 

One of the first steps in determining whether it is worth breaking ground on a given project is to know if there is enough demand in the marketplace. A surplus in the supply chain can lower vacancy rates and with it – potential rent. All of it combined determines the value of the property and expected income. 

We will try to walk you through how to forecast industrial real estate supply and demand and explain it simply.

The world of industrial real estate supply & demand is complex

Unfortunately, the real estate world cannot be as agile and flexible as other industries. 

Pivoting in a middle project can oftentimes be costly. Miss the opportunity of demand, and you can very soon find yourself with a pricey error in judgment on your hands. To go with the flow, you should have a deep understanding of supply and demand in order to spot the best time to buy, sell or develop properties.

The implications of shortage in properties that are in demand can be godsent for real estate professionals, due to the prices likely rising when producing properties are limited.

Why the demand for industrial real estate?

While the current events and the setbacks pandemic has caused have had a significant impact on the real estate market, industrial space remains one of few types of real estate that has some decent demand. E-commerce exceeds traditional retail spending, and in order to adapt to this trend and shift in consumer behavior, many traditional and online-only retailers need more fulfillment centers and logistics facilities. 

For industrial real estate developers, seeking new development or redevelopment opportunities, the skill to find the right location is very important. Having the right technology solution will allow industrial developers to swiftly, efficiently conduct due diligence and start negotiating for properties they want. Let’s talk about this a bit more.

Warehouse building in black and white

How can location tech and data help?

With the help of map-based real estate technology, industrial professionals can search for properties in targeted markets with ease, all in the range of their requirements like lot size, building square footage, land use and more. 

A good location technology solution can allow industrial site developers to add any additional overlays like demographics, hazard data, traffic data to gain a deeper understanding of the area around the property. 

When the target sides are identified, industrial developers can use location technology and data to determine property ownership, then they can leverage information regarding finance, such as transaction history, assessed value and nearby equivalents as a baseline to enter into the negotiations. When all the necessary data required for property research and analytics is within a single application, industrial developers can waste less time searching for the information they need and instead focus on planning developments.

Demand for industrial real estate is ALWAYS changing

Demand for industrial real estate, no matter if it’s for trade, production, manufacturing, transportation or logistics is always changing in its response to market influences. While it is possible to get a general idea of the forecast for the supply and demand by observing the national market, looking out for local and national shifts can give you a clearer picture of what lies ahead and your move will most likely result in a profitable outcome for your CRE development and growth.