Q2 demand outstripped supply in industrial and retail REIT segments, while it was vice versa in apartment and office REIT sectors, according to a report by the National Association of Real Estate Investment Trusts.
Net absorption and net deliveries equaled 98M and 72M square feet, respectively, in the industrial REIT sector in Q2. Excess net demand has been positive for seven straight quarters, the report noted.
The strength has been predicated on vibrant demand for logistics and warehouse space, but Amazon's recent move to scale back its warehouse operations and developments may be a harbinger for the wider market, according to the report.
Meanwhile, the retail segment has had a recent surge in net absorption. The sector continued to experience a dearth of net deliveries.
On the other hand, apartment net absorption has fallen from its recent peak and net deliveries have remained fairly consistent, averaging ~400,000 units over the past year.
Excess net demand was driven to near zero in Q2.
In the case of office REITs, negative excess net demand has persisted since Q1 2019. The sector has struggled with demand and its ability to limit supply.
With work-from-home and flexible workplace arrangements likely to persist, office demand may not materially strengthen, according to the report.