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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