Industrial REITs: Empty Shelves, Ample Opportunity
- Out of Stock: The red-hot industrial property market - "ground zero" of supply-chain shortages - continues to ride a historic demand-supply imbalance as businesses scramble to build out supply resiliency.
- Industrial REITs - which recorded the strongest dividend and FFO growth of any real estate sector in 2020 - continue to thrive amid "extreme competition" for logistics and distribution space.
- Despite robust levels of new development - particularly from REITs themselves - vacancy rates remain at historic lows while robust demand has powered 45 straight quarters of positive net absorption.
- Pandemic-driven supply chain disruptions came as inventory levels were already historically lean amid a shift towards "just-in-time" inventory management. Resilient supply chains will require substantial investments in logistics space.
- Logistics REITs surely aren't cheap, but absent significant efficiency gains in warehouse utilization, the secular tailwinds of limited supply and robust demand should persist into the back-half of this decade.
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