5 Reasons Industrial Real Estate is Going to Be Hot in 2019
According to Deloitte’s 2019 Commercial Real Estate Outlook, which surveyed 500 global investors, industrial real estate investment trusts, along with certain classes of nontraditional REITs, are the only asset not trading at a discount to their net value. That is despite growing global uncertainty due to US tariffs and Britain’s exit from the Euro.
Globally, commercial real estate volume went up in the first part of this year by 13% (9% in the US). Forecasters expect this trend to continue, with the vast majority of global investors (97%) planning to increase investments in commercial real estate. Here are 5 reasons why we expect industrial to remain hot in 2019.
#1: Investors Plan to Diversify in 2019
The survey found that the majority of executives around the globe are looking to diversify their portfolios this year. That’s good news for industrial. Whether diversifying to add more retail space, more warehouse space, or more office space, industrial is right there in the mix. Wherever CEOs plan to invest, in order to diversify their portfolios, they will likely add at least some industrial space to their holdings.
#2: Investors Prioritize Flexibility and Agility for 2019
Flexibility and agility have been the buzzwords for the second decade of the 21st century. Technology is changing so rapidly, causing businesses to change, and therefore office and retail designs to change. The smartest investment properties are those that can be most easily adapted to different uses.
#3: Data Centers Will be Hot Investments in 2019
Non-traditional assets that are expected to see increased investment include data centers. With all of the technology necessary for daily life to function in 2019, all of that data is tethered to a data center somewhere. As technology increases, so does the need for more data centers. The year ahead will see industrial properties sopping up a lot of those investment dollars.
#4: Repurposed Buildings Will Attract New Investors in 2019
Industrial has been the target for developers looking to repurpose existing assets for years now. Forecasters expect that to continue in 2019. In fact, investment in repurposing existing buildings is the priority for many globally – particularly adapting buildings for new smart and green technology.
#5: Location Will Make Industrial Attractive Assets in 2019
A lot of industrial is located in the outskirts of town. Traditionally, that has been a downside for retail investors or office park investors. Expect that to change in 2019, with more developers seeking to build small commercial communities based around a data center or distribution center. Industrial investors will be actively seeking new industrial over the next year.