The spread between Retail and Industrial rents is starting to compress

As e-commerce gains share of retail sales, Industrial space is becoming more demanded and pushing rents

May 13, 2021
Retail to Industrial rent spread

10-yr rent percent growth
(2011 to 2021)
Retail: 19.6%
Industrial: 57.1%


The rate impact of e-commerce
As consumer delivery expectations have tightened over the past few years, the need for e-commerce distribution space is pushing Retail and Industrial rents closer together. 2019 saw the beginning of the rent compression, which coincides with a big jump in e-commerce’s share of retail sales.

Rents on the rise, now and later
Over the past ten years, Industrial rents grew by nearly forty percentage points more than Retail. We expect this trend to continue as more and more new Industrial space hits the market and is leased up and as the low vacancy rates continue to set the stage for a competitive leasing environment. Both of these factors (the newer supply and leasing competition) contribute to a rise in Industrial rents.

Up next
The next question to answer is where are rents compressing the most? Are Urban Logistics markets seeing a tighter spread between the two property types? Are neighborhood Retail centers seeing less of a drop in rents than malls? JLL’s Urban Logistics team has the insights. 

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