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Assessing The Industrial Sector Amid The Coronavirus Pandemic



The coronavirus pandemic has impacted businesses and markets across the country and the world. Commercial real estate is one area that has been impacted in areas across all sectors and markets.

J.H. Berry & Gilbert actively studies the changing market conditions and how it effects our clients. Today we observe the trends defining the industrial sector of commercial real estate, which has been able to maintain a degree of stability since the pandemic began.

While Birmingham’s industrial market has not been immune from the effects of COVID-19, commercial real estate experts note it remains one of the healthiest in the local market, particularly for warehousing and manufacturing. The U.S. industrial sector also remained solid as of the first quarter, with the average vacancy nearing a record low at 2.8%, per CoStar On a national level, the industrial market is a little less tight with vacancy levels at 6.0% according to JLL.

In the first quarter of 2020, industrial deals were moving along like usual, and many deals made it across the finish line before pandemic effects truly took hold of the market.  April and May saw a bit of a dip, again contributed to the pandemic, but performance has been trending toward normalcy since June and July. The summer has seen more participants return after giving everyone an opportunity to catch their breath and evaluate what they believe the new normal will look like, and how to prepare for such.

The relative stability compared to other sectors and return to normalcy in the industrial CRE market can likely be attributed to a few factors. Most of the local and regional firms occupying industrial space in the Birmingham market were considered “essential businesses” and were not required by the state to work from home during the state-wide quarantine. Additionally, many occupants of industrial CRE in Birmingham compete in markets that have fared far better than many in the retail and entertainment sectors. Sectors such as transportation, manufacturing & distribution for products related to home goods, building materials, and food & beverage have largely fared quite well given the common denominator of products associated with the ‘Safer-at-Home’ mandate.

If you’re looking to buy, sell or lease industrial space, or have any additional questions regarding commercial real estate, contact J.H. Berry today.