The real estate market is diverse and offers a wide range of investment opportunities in different property segments, such as retail, residential, and healthcare. However, over recent years, the demand for industrial real estate has increased, owing to its associated economic benefits. The COVID-19 pandemic has emphasized the crucial role of industrial real estate in the manufacturing, storage, and distribution of goods, both domestically and globally.
The Impact of the COVID Pandemic on Industrial Real Estate
The unprecedented rise in e-commerce during the pandemic and the challenges faced in the shipping industry, such as the congestion of ports in California, underlined the need for more modern and efficient fulfillment centers to meet the growing demand for online orders. Moreover, the geopolitical tensions and pandemic-induced supply chain risks have encouraged many companies to restore jobs in the United States and consider new manufacturing projects.
Investing in the Future: The Benefits of Investing in Industrial Real Estate
The U.S. industrial leasing activity is expected to be moderate in 2023, as occupiers delay their expansion plans and the need for extra inventory decreases, according to CBRE’s U.S. Real Estate Market Outlook 2023. Nevertheless, e-commerce growth, supply chain transformation, and location optimization will continue to drive the demand for commercial space in the coming year. Occupiers will prioritize markets with robust population growth and efficient distribution centers to ensure quick and efficient delivery of online orders.
The U.S. government is supportive of industrial real estate development and has introduced various tax breaks and incentives for building and investing in manufacturing centers for goods such as semiconductors, electric vehicles, and pharmaceuticals through legislation such as the Chips and Science Act and the Inflation Reduction Act.
Rising Demand for Industrial Real Estate: An Opportunity for Investors
Investors interested in industrial real estate can consider the Pace Industrial Real Estate ETF (INDS), which focuses on developed market companies that generate a significant portion of their revenue from the commercial real estate sector. The ETF includes holdings in leading firms like Prologis, the world’s largest industrial real estate company, and Rexford Industrial Realty, a firm that has a strong presence in the valuable industrial market of Southern California.
Despite its moderate performance track record, the fund has proven to be a solid performer, even during times of heightened market volatility. With the continued growth of e-commerce and the transformation of the supply chain, investing in industrial real estate could provide a promising investment opportunity for those seeking diversification and stability in their portfolio.
California’s Booming Industrial Real Estate: A Guide to the Golden State’s Thriving Supply Chain Industry
California is home to one of the largest economies in the world and its thriving businesses are contributing to the growth of industrial real estate in the state. Industrial real estate in California refers to commercial properties that are used for industrial purposes, including manufacturing, storage, and distribution of goods. With the state’s strong economy and favorable business environment, commercial real estate in California is experiencing increased demand, leading to significant growth and investment opportunities in the sector.
The COVID-19 pandemic has highlighted the importance of industrial real estate in California and its role in supporting the manufacturing, producing, storing, and distributing of goods. As the rise of e-commerce has increased the need for fulfillment centers and the confluence of geopolitical tensions has led to plans for reshoring jobs to the U.S., industrial real estate has become a critical part of supply chain management.
The U.S. Government Offering Tax Breaks
The U.S. government is supportive of industrial real estate development in California, offering tax breaks and other incentives through legislation such as the Chips and Science Act and the Inflation Reduction Act. This support has encouraged investment in industrial real estate, including the construction of new industrial properties and the upgrade of existing ones.
People who invest in industrial real estate in California can expect to make a lot of money in the future. This is because of the growth of online shopping and changes in how goods are made, stored, and delivered. A report by CBRE says that some companies might slow down their plans to expand in 2023, but the trend of buying and selling things online and improving the way goods move will keep going. So, investing in industrial real estate in California is still a good idea.
