CHICAGO, July 1, 2021 - In the past year, the demand for industrial real estate hit record high numbers. This year in the 9th annual Industrial Tenant Demand Study, JLL Industrial tracked 1,800 individual future tenant requirements needing over 600 million square feet of space, providing insights into future leasing potential and the trends that will drive the demand. Future demand voume is up in 2021 (a 22 percent increase year-over-year) and is more widespread across all industries than ever before. With the pandemic accelerating demand for home deliveries, logistics and parcel delivery has taken the number one spot in almost every region across the country-now making up nearly fifth of all industrial demand as a broader range of retailers enter the home delivery game.

'Logistics and parcel delivery is the most active industry across nearly all building sizecategories,' said Craig Meyer, JLL President of Industrial. 'This tells us that all ranges of companies need distribution services at all types of locations-urban, suburban or ex-urban. Traditional Retailers are most active in the biggest size range of 1 million square feet and up, with a portion of that being e-commerce related.'

The top five industries driving demand in logistics include:

  • Logistics and Parcel Delivery (L&PD) - L&PD reach is more widespread this year, with a growing focus on secondary and tertiary markets. With the growth in leases experienced in 2020 compared to demand, expect even more L&PD leases to be executed in 2021 and 2022 when looking at this year's demand.
  • E-commerce - The tenant base for e-commerce is diversifying, with a growing number of unique active tenants each year. These new entrants to the e-commerce sector rose by 21 percent this year. With many sources projecting e-commerce to make up 40 percent of all retail sales in the next five to 10 years, JLL Industrial expects demand for all related industries to continue to gain more share.
  • Traditional Retailers - As consumers spent 2020 fixing up their homes, now they are filling them up. There is a lot of pent-up demand in value retailers. Nearly 17 percent of traditional retailers have an e-commerce need.
  • Food & Beverage (F&B) - The Southeast saw a lot of food & beverage activity and the largest industry growth. Except F&B's future demand to remain strong as consumers keep up home delivery habits, boosting the logistical needs for the industry
  • Construction, Machinery and Materials - Growing demand for housing is benefitting the construction industry. Demand for construction, machinery & materials companies rose by nearly 15 million square feet from 2020 to 2021. The need for more housing is keeping home builders and residential developers busy

In terms of timing, tenants are in the market slightly longer than last year, due to increased competition and lack of immediately available space. While the pandemic caused new to market transactions to slow slightly in 2020, new requirements this year increased by 27 percent as tenants readjust to meet consumer demand.

Requirements for manufacturing space also soared, rising 93 percent year-over-year.

'The driving factor in this uptick in demand is attributed to the reshoring of U.S. manufacturing and the establishment of a U.S. sourcing presence,' said Mehtab Randhawa, JLL Senior Director of Research. 'Companies are realizing that long supply chains are subject to disruptions and higher costs, thus for certain products and industries reshoring makes economic sense, while mitigating risk.'

'Looking forward, we expect the U.S. Industrial tenant demand to keep on the upward trend it has been seeing over the last decade, with no slowdown in sight,' said Gillam Campbell, JLL Manager of Industrial Research. 'With previous years' demand evolving into real leases, we know that current tenant sentiment remains strong.'

About JLL Research

JLL's research team delivers intelligence, analysis and insight through market-leading reports and services that illuminate today's commercial real estate dynamics and identify tomorrow's challenges and opportunities. Our more than 400 global research professionals track and analyze economic and property trends and forecast future conditions in over 60 countries, producing unrivalled local and global perspectives. Our research and expertise, fueled by real-time information and innovative thinking around the world, creates a competitive advantage for our clients and drives successful strategies and optimal real estate decisions.

About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $16.6 billion in 2020, operations in over 80 countries and a global workforce of more than 91,000 as of March 31, 2021. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.

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Jones Lang LaSalle Inc. published this content on 01 July 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 July 2021 14:52:17 UTC.