Industrial and Data Center Sectors Staying Healthy in Pandemic

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Sep 14, 2020, 10:05 ET

DALLAS, Sept. 14, 2020 /PRNewswire/ -- Industrial buildings, cold-storage facilities and data centers are thriving in the COVID-19 environment as the pandemic is driving increased demand for these properties, according to BBG, a leading due diligence commercial real estate firm.

These CRE sectors have fared better than others, such as retail and office, during the pandemic, which continues to impact the national economy.

Demand for industrial and data center sectors has accelerated in recent months as the outbreak and stay-at-home requirements spurred more online grocery and other virtual shopping. Remote working has also driven data center demand as people rely on the Internet for work. Content streaming for at-home entertainment is another significant source of data center demand.

According to a NAIOP survey released in July, the industrial sector followed an upward trend in new development/redevelopment and building acquisitions.

Industrial building acquisitions continued to post significant gains, according to the NAIOP survey. More than 90 percent of the respondents observed that there was more building acquisition activity in July, compared with around 70 percent in June. In the April-May period, survey respondents said industrial building acquisitions were in the 50-percent to 60-percent range.

Demand for cold-storage facilities also continued its upward trajectory, given a significant lift from grocery stores, restaurants and other food establishments requiring more space to store frozen food to meet consumer demand for home delivery and take-out orders during the viral outbreak.

According to one industry report, there is currently 220 million square feet of cold storage space in the U.S., with New York, California, Illinois, Texas, Florida and Wisconsin ranked as the top states with cold-storage facilities.

BBG CEO Chris Roach commented: "While the real estate industry is adjusting to the impact of the COVID-19 pandemic, it's heartening to see that the industrial and data-center properties remain vibrant segments during these unprecedented times. We anticipate that other CRE segments will begin showing improvement as market conditions change."

About BBG
BBG offers comprehensive due diligence services including valuation, advisory, property assessment, energy services, cost segregation, zoning and ALTA/NSPS Land Title Surveys. Headquartered in Dallas, the firm has 36 offices in key US markets and more than 2,700 clients. As one of the Big Five national commercial real estate valuation firms, BBG has achieved a reputation for personal attention, on-time delivery and deep expertise in multi-family, office, retail and industrial sectors. For more information about BBG, please visit www.bbgres.com.

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SOURCE BBG