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There is no doubt COVID-19 will negatively affect many sectors of the real estate market, but not all industries will be impacted in the same way.

Industrial real estate, in particular, may actually benefit from the current crisis. CBRE Group (NYSE: CBRE) published a market update on April 8, 2020, specifically relating to the impact of COVID-19 on the industrial sector of commercial real estate (CRE), clearly showing that several types of industrial real estate are seeing huge increases in demand since the outbreak.

Public refrigerated warehouse companies (PRWs) and online grocers are largely benefiting from the current conditions. According to their data, the increased demand for home delivery or in-store pick-up of groceries has created an additional need for “75 million to 100 million sq. ft. of freezer/cooler space.” Online orders, in general, have also increased since March 2020, producing increased demand for storage and fulfillment space. Data centers, which were already seeing record high net absorption in the market, have also grown in demand as data usage has increased and more people begin working from home.

Self-storage facilities, while not necessarily benefiting from the current pandemic, are one of the least affected CRE properties types. Over the past several months, they have seen little to no change in occupancy or delinquency. It’s important to note that much of this demand we are currently seeing for these specific industrial properties could be short term. Investors and developers are waiting to see if the demand will be sustained or subside as things begin reopening. Over the past three months, new development as a whole for the industrial sector has slowed.

The industrial market has consistently been one of the top performing industries for CRE over the past few years and will likely continue to be a leader for commercial investments. Real estate investors who own these types of industrial real estate properties or have shares in real estate investment trusts. (REITs) or crowdfunding investments may see short-term increases in returns, dividends, or value while demand is high. If behavioral changes continue to affect the long-term supply and demand for industrial real estate, there could be big opportunities for real estate investors and developers in this sector.

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