While the industrial market has benefitted from the dynamics of the pandemic and the connected recession, developers largely paused speculative development activity due to the sudden market uncertainty. Developer Duke Realty, however, is confident in the demand for speculative development. The firm has broken ground on a 1.2 million square foot industrial facility in Perris, California.

"All developers stopped new speculative construction at the start of the pandemic including Duke Realty," Jim Connor, chairman and CEO of Duke Realty, tells GlobeSt.com. "This enabled demand to catch up. During the third quarter, we fully leased a 1.1 million square foot property in Southern California that was started on a speculative basis in the fourth quarter of 2019 and is scheduled to be delivered in early 2021. Due to our ability to consistently lease up our speculative space, we began two new speculative development projects during the third quarter of 2020, the 728 West Rider Street facility in Southern California and the Duke Sumner Logistics Center in the Seattle market, totaling 1.4 million square feet."

Looking ahead into 2021 and beyond, Connor expects continued demand growth for quality industrial product, which will keep vacancy rates low. "We anticipate the industrial markets will remain in balance with vacancies below five percent for the remainder of 2020 and well into 2021," says Connor. "In fact, despite pandemic challenges, Duke Realty's total in-service portfolio was 97.1 percent leased at September 30, 2020 compared to 96.7 percent leased at June 30, 2020 and 96.2 percent leased at September 30, 2019—driving the company's highest total and in-service portfolio occupancy levels since early 2017."