On the demand side, long-term trends continue to boost demand across our favored sectors. Rental housing is an important component of overall housing supply, and demographic shifts all over the world support long-term, stable demand for housing of all kinds. In parts of Asia, for example, ongoing urbanization and a trend towards smaller household sizes is driving up demand for housing. Millennial household formation is a factor in the United States, and both in Europe and the United States there is also demand for specialty housing.
In the industrial sector, strong deliveries of new construction have caused net absorption of available space to slow, but the pipeline of new supply is slowing dramatically. The 309 million square feet of industrial space under construction as of the third quarter of 2024 is the lowest level since 2018,3 which should support demand for existing property going forward. Trends like onshoring and e-commerce favor long-term demand for industrial space as well. In Asia, our team is also seeing reshoring drive demand, while in Japan, we are seeing industrial opportunities from corporations shedding non-core real estate assets to improve shareholder returns.
Fundamentals are also strong in real estate credit, where a pullback in available bank capital in the United States has created a greater need for private debt capital. Some worry that falling interest rates will make real estate debt less attractive, but we also think bank retrenchment is a secular trend, which means that private lenders with the ability to lend at scale will find their capital to be in high demand for the foreseeable future. At the same time, we think rising transaction volumes and refinancing activity should shake loose more attractive opportunities to lend. All-in, we think real estate credit will continue to offer very compelling risk-return for investors.
Strong fundamentals are clearly important for real estate investments, but we think real estate owners have the opportunity to build on solid fundamentals with good management practices. Our goal is to start with attractive fundamentals and then add value on top.
