CREJ

Page 24 — Office & Industrial Quarterly — June 2021 www.crej.com INDUSTRIAL — MARKET UPDATE T he industrial market shows no signs of slowing after recording 44 consecutive quarters of positive net absorption both nationwide and in the Denver metro area. Nationwide, asking rents rose in the first quarter to a record $8.44 per square foot, up 2.2% from the end of 2020 and 7.1% year over year. Rates likely will continue to rise from the increased demand from e-commerce and the need for safety stock to safeguard from sup- ply chain issues experienced from COVID-19. n The effects of e-commerce. The pandemic caused a surge in e-commerce activity, which for the first time in history accounts for just over 20% of total national retail sales. In 2020, retail saw a 32% increase in online sales, spurring on a new wave of industrial demand. A CBRE research study estimates that for each incremental $1 billion growth in e-commerce sales, an additional 1.2 million sf of distribu- tion space is needed to support the growth. While online sales growth is expected to slow in 2021, CBRE expects online sales to account for up to 25% of all retail sales by 2025, furthering the demand for addi- tional warehouse space across the country. n Reaching the consumer. While there will continue to be some retail-to-industrial conversions, it still remains a niche area with large barriers to entry such as zoning restrictions and building design. Instead, many retailers are taking an omnichannel retail approach to meet the shift- ing needs of their consumer. This constitutes flexibil- ity with sampling, ordering, pickup/ delivery and returning items. Brick-and-mortar retail will continue to retrofit their stores to support the growing online sales and customer returns while they continue to expand distribu- tion networks to better reach the customer. With this, last-mile loca- tions will continue to evolve and be in high demand as companies want to get closer to their consumer to assure quick delivery times. n Denver continues positive trend. In the first quarter, the Denver metro area recorded positive total net absorption of 976,255 sf, more than twice the absorption volume year over year. The airport submarket was the primary driver for activity, recording 923,519 sf of positive net absorption. n Record-high deliveries. Nineteen projects totaling just under 3 mil- lion sf were completed in the first quarter, a record high. The airport submarket accounted for two-thirds of the total delivery volume, add- ing 2 million sf of warehouse space in Ascent Commerce Center’s new Buildings 1, 2 and 3, and three other Denver sees record-high deliveries, strong metrics Sam Dragan Associate, Industrial & Logistics, CBRE Source: U.S. Census Bureau, CBRE Research, February 2021 Total retail sales and online sales, excluding auto/gas/food services and drinking places. Please see Dragan, Page 37 CBRE Omnichannel retailing is becoming a common retail approach.