Investors are increasingly looking to redevelop unproductive office properties for industrial uses as ever-increasing demand has left many would-be industrial tenants out in the cold.
Industrial vacancy hit 4.6% as of Q3, according to data from Newmark, an all-time low. And as tenants race to secure space (with rents at staggering highs), the firm says that since 2018, at least 45 office properties totaling more than 11 million square feet have been redeveloped—or are in the process of redevelopment—for industrial use.
"The US office market is contending with uncertainty in the post-COVID-19 world, and the pandemic has only accelerated obsolescence of some older, less-amenitized product," the report notes. "This divergence among asset classes is increasingly driving investors and developers to consider industrial redevelopment opportunities for some unproductive office properties."
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