We've been talking for a while about the scarcity of industrial real estate, or flex/warehouse space. Some of the demand is clear, but it's worth stating. People are quitting their jobs in record numbers--150,000 people a day in November alone! According to one recent report, 40% of those workers did not have another job when they left the old one. A reasonable percentage seems to be going into new businesses that are being started. Just as with household formation, new business formation leads to shortages in space. Even though many are startups, needing only a little space, others are finally taking more room.
Shortage of labor
Given the shortage of labor in so many fields, people are turning to automation, subcontracting, or outsourcing for some positions. Connecticut, while doing better than it has in some past years, still has an outflow of jobs, and a workforce either out on purpose or not suited for the jobs available. That means that employers need to rely on fewer people--and this is also true nationally--to get goods and services to end users. That leads to a need for storage space, or space in which to assemble or distribute products. Because we are so close to other big metro areas, we are ideally suited to be the "last mile" source for deliveries.
What does that mean about office space?
Although it will come back, as more people return to work, it won't be the sector that booms. Nor, after some point, will retail expand, if it can't find the people with which to staff bricks and mortar operations. More purchases will be done remotely, with home delivery, takeout, or regional hubs. That leaves industrial and flex/warehouse space. For all the reasons stated above, it is primed to take up the slack in demand.
What about repurposing older buildings?
That seems very likely as well, although anything complicated will have the supply chain issues that we are seeing everywhere. Not only building materials, but, again, the lack of labor, will make it harder to convert space, and will take more time. While building from scratch has the same delays, it is sometimes easier to plan, since you won't have as many surprises during the construction process.
If you are sitting on an industrial space, unused or underutilized, this is your chance to get a good return. If you are looking for that type of space, you may have to make compromises. Gone are the days of endless looking, with buyers continuing to delay pulling the trigger, while they searched for the perfect place. There isn't going to be enough out there for some time into the future, so get space while you can.