While it is still uncertain whether the market will rise again as cases increase in pockets across the country, this pandemic has affected the industrial, retail, multi-family and office markets in the following way, explaining what to look for in the rest. There are second-quarter results, with significant trends emerging in all markets. In April, demand, lease, vacancies, and transaction volume were all affected in different ways. By mid-March, a clear picture of the entire country has emerged from the initial pandemic landscape.
The industrial sector, which is considered one of the most resilient asset classes to the Pandemic, has demonstrated its strength over the past few months. Businesses have grown more comfortable in assessing medium- and long-term demand and building industrial space commitments. We expect strong demand for supply, completion, cold storage, and data center space as the economy progresses through post-COVID recovery.
Leasing activity in April fell below half of the pre-pandemic level, but then gradually improved, reaching even the pandemic pre-trend level in the first week of June. The demand for e-commerce fuel for distribution and completion meets the need for industrial space even in the most uncertain and volatile quarters. The obvious trend in office space for lease , especially over the past few months, has been the need for smaller centers located near densely populated urban areas.
About 60% of the latest industrial leases include small warehouses of less than 200,000 square feet used by healthcare, medical companies, manufacturers, and e-commerce companies. Small businesses in the Pandemic have seen a slight decline in land leasing activity this year due to financial pressure.
Amazon claims to have been the most active company in warehouse space acquisition since the onset of the Coronavirus pandemic and is one of the largest residents of smaller warehouse buildings. Small and medium-sized buildings had an 80% discount last year. However, in the second quarter, the company still bears only 10% of its warehouse rent. As e-commerce grows during the epidemic, Amazon and the changing needs of consumers will meet.
Increasing demand for warehouses has forced manufacturers, retailers, and other firms to pay or return the land to landlords. Vacancies rose to 5.5 percent this quarter. It was 5.3 percent in the same period last year. Costar reports that five-year solid rent growth ended the quarter with a 3.8 percent decline. Investment sales also slowed this quarter due to the epidemic, with sales falling to just $ 13 billion, the lowest level since 2014.
The increase in sales-lease transactions by cash-strapped retailers and the rapid sale of small warehouses to last-mile e-commerce outlets have helped stabilize sales. They expect sales leaseback transactions to rise as they offer attractive investment opportunities and offer extra liquidity to cash-strapped retailers.