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Despite a Downturn, the US Industrial Real Estate Sector is Moving Positively  

estate industrial

Despite a Downturn, the US Industrial Real Estate Sector is Moving Positively  

Post-pandemic the industrial real-estate sector suffered a down-turn. During the pandemic, the e-commerce boom that fueled deliveries from tomatoes and cereal to iPads and shoes boosted demand for warehouse space. Once the world opened up again, however, people’s normal shopping patterns commenced leaving the heydays of home orders behind. Yet, despite some gloomy predictions, industrial real-estate is having a rather prosperous year, historically speaking. 

In the current climate of high interest rates, weak freight demand, and a shift in consumer spending, third-party logistics providers, e-commerce retailers, and similar firms are still leasing fewer new warehouses. Yet, the industrial real-estate market has been surprisingly resilient. During the 2020-2022 pandemic years, the warehouse vacancy rate (nationwide) was down to roughly 3%. Some regions such as Southern California were completely full. Compared to 2019, however, 2023 will likely end more favorably. 

Approximately 205 million square feet of warehouse space was leased by logistics operators in the second quarter of 2023. This was less than the same period in 2022 (235 million) but eclipsed the second quarter of 2019 – 135 million square feet. Firms are still seeking to expand but 2021 and 2022 are clouding expectations. The sector will not return to the pandemic heights, but companies are actively seeking to offset the supply-chain disruptions that were common during the pandemic by moving inventory closer to their customers. 

During the pandemic, it was common for retailers to run out of stock. The inventory-to-sales ratio hovered in the 1.25 level in 2019, popped upwards for a brief moment in early 2020, and then nosedived to a low of 1.05 by early 2021. It has slowly climbed back and is currently in the 1.20 range. Sam’s Club, Amazon.com, and Target have all been opening additional logistics facilities with an eye on speeding their e-commerce deliveries. Additional demand has also been spurred on by companies that can take advantage of electric, vehicle-related subsidies and require warehouse space for batteries, semiconductors, and related parts. 

Dallas/Fort Worth, Phoenix, Savannah, Chicago, and Atlanta had the most new industrial space under construction in the second quarter of 2023. West Coast port delays during the pandemic shifted importers to re-route shipments towards the East Coast and Gulf Coast. Warehouse rents are still rising even as leasing has decelerated which indicates space overall is tight. But all signals point to 2023 being a good year for industrial real-estate albeit coming off some banner years that might not ever be achievable under normal circumstances.      

low-e

Low-e Coating: An Energy-Efficient Solution in Coated Glass

One of the most sought-after trends in real estate has been the use of coated glass as contractors seek to generate a leading-edge in the coated glass market. Innovations have paved the way towards improving the energy efficiency of buildings. Coated glass windows, for instance, play a valuable role in the energy savings of a structure.

In common parlance, buildings have a massive role in greenhouse gas emissions given that a large chunk of the global energy demand emanates from them. Not to mention windows are responsible for the greatest energy loss in the backdrop of high overall heat transfer coefficients (U-values). This is where the coated glass comes to the rescue: contractors and their commercial partners have opportunities galore to cash in on the trends that are likely to reshape the landscape.

Coated glass is used copiously in modern construction and buildings owing to aesthetic attributes, lightness to the structure, and advanced thermal insulation. Architects and contractors regard this as one of the most sought-after options since it reduces weight on the foundation and makes the building lighter as compared to construction walls.

Coated glass makes the area look far more spacious and creates a sense of “feel-good” factor with long windows and obviates external wastage. Global Market Insights, Inc., has projected the coated glass market size to surpass US$ 24.5 billion by 2024.

State-of-the-art overview of Low-E coating

The architectural glass will provide energy-saving, aesthetic and technical attributes such as thermal insulation, solar control in fenestration, and façade. Glass with low internal reflection will remain instrumental to do away with the mirror effect from inside of a building during nighttime, light transmission, and maximum visibility.

These parameters allude to mega-trends for low-E coated glass, such as double silver glass and triple silver glass. In a bid to boost the energy performance of the façade, hard-coated glass and soft-coated glass have gained impetus. While soft-coated glass balances between light transmission and energy performance, hard-coated glass strikes the balance between cost and energy performance.

Currently, contractors, architects and façade managers see coated glass thriving as an adaptable material delivering unparalleled growth potentials. Low-E coated glass has fueled the trend to reduce the amount of ultraviolet and infrared light without reducing the amount of light that enters the building.

Why Low-e glass?

Low-E coated glass has turned out to be a cost-effective and unique solution to save energy as windows were primarily regarded as the least energy-efficiency component of a building. With commercial buildings in the U.S. wasting around 30% of the energy they consume, low e-coating tends to reduce the emissivity of the glass and reduces the U-factor. Some of the “green features” of low-e glass are elucidated herewith (included but not limited to):

-Reduces UV rays that lead to less fading;

-Provides optimum visible light transmittance, reducing lighting loads;

-Reduces solar heat gain coefficient (SHGC) values—transcending into cost and energy savings;

-Maintains temperature and provides insulating benefits.

Low e-coated glass has the innate ability to improve thermal comfort in the fall and winter, with stakeholders infusing funds in solar control low-e coatings (soft coat) and passive low-e coatings (hard coat).

It is worth noting that demand for soft-coated glass will be more pronounced in the U.S. as it provides better UV protection and has a decent U-value. Not to mention the soft-coated glass also reflects the warm and cool air back into the room.

Solar control glass for hospitals: a palpable trend

Contractors have upped their focus on solar control glass in hospitals to boost patient’s visual comfort and vitamin D levels, reduce anxiety and depression. Solar control glass is helping hospitals go green, thanks to its ability to reduce the need for artificial lighting and lighting costs, thereby making hospitals energy-efficient.

With low glare, energy-efficiency, optimum light transmission, indoor environment quality, and comfort, coated glass can be used effectively in hospitals. Solar coated glass is likely to add value to the performance, light transmission, and durability.

North America to be a favorable coated glass consumer

With the trend towards building new infrastructure soaring in the U.S., contractors are envisaging North America as a happy hunting ground. Glass façades in several buildings in skyscrapers, buildings and hotels in the U.S., Canada and Mexico have become a natural fit in North America coated glass industry.

Low-e coated glass will expand its footprint in the region as it will remain instrumental in both summer and winter seasons. For instance, it will preserve heat indoors during the winter season, while it will also ensure windows are well insulated to withstand hostile weather conditions. Traction for low-e coating will be noticeable in visible light transmittance and U-value.

The U.S. coated glass industry is expected to be replete with investments following the construction boom in the country. The U.S. construction growth will tilt towards the southern states, with Oxford Economics estimating that the industry could grow faster than China over the next 15 years, thereby instilling confidence among construction contractors.

The coated glass market is likely to be one of the most dynamic sectors as low-e glass and solar control glass have become smart choices for architectural designs to boost sustainability. Advancements in green technology to reduce energy consumption will bolster sales of coated glass as these green products have come as the most compelling evidence of the high energy efficiency performance of coated glass.