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Institutional Investor: Rising Online Retail Sales Drive Industrial Real Estate Boom

From Institutional Investor:

In the real estate market, is there a law of conservation of brick and mortar akin to chemistry's law of conservation of mass?

That question arises as the surge of online retail sales gives a strong boost to industrial real estate. At the same time, many brick-and-mortar stores are closing. "This is the ultimate irony," says Eric Frankel, an analyst for real estate research firm Green Street Advisors in Newport Beach, California.

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Green Street estimates online sales boosted industrial real estate demand 30 to 40 percent last year, and analysts expect the boom to persist. Average industrial rents rose 6 percent last year, the steepest increase in 17 years, according to Green Street.

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Green Street’s Frankel says supply will probably catch up with demand soon, lowering rent increases but leaving them higher than the rate of inflation.

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To read the full article from Institutional Investor, click here.