REITS: Industrial Properties Look Promising On These Trends

April 3, 2020 | News, Real Estate

Industrial REITs look attractive, but the market selloff been brutal.

While real estate markets taking hits, these assets may be a case of the baby being thrown out with the bathwater.

Like most Real Estate Investment Trusts, the prices of industrial REITs have declined sharply in the coronavirus driven selloff in the equity markets. While there may be real concerns for some sectors of real estate like office space, shopping centers, and even multifamily properties, industrial real estate may well see a dramatic increase in demand for the properties they own and manage.

Industrial REITs Trends

Increasingly industrial properties have been the chosen place for e-commerce companies like Amazon (AMZN) to store material and operate their delivery business.

Industrial properties are the last mile of the e-commerce industry.

While e-commerce has been growing for some time, the shutdown across many parts of the United States has created new demand for products delivered directly to the home. Even if people want to shop right now, many stores are closed, so consumers have to turn to e-commerce companies.

Industrial real estate is also going to see increasing demand for space as a result of the continued increase in the number of states that are legalizing cannabis for medical and recreational purposes.

The industry needed warehouses to store supplies and operate dispensaries. In many towns, cannabis dispensaries are something of a not in my backyard business, and increasingly industrial parks have been the solution to the problem that works for both the citizens of the town and the cannabis companies.

E-commerce and cannabis were tow of the hottest trends in the economy before the pandemic. The usage of both has grown during the shutdown and stay at home orders that have been issued in most regions of the United States.

The demand will continue to grow as we all realize that Pandemics may be a part of life in a global economy. That will keep demand high for industrial properties and help generate high levels of cash flow for the industrial REITs.

By: Tim Melvin

Related: Blackstone Group Buys Colony Industrial for $5.9 Billion

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