Nationwide demand for warehouse and distribution space at 18-year high: report

Surging e-commerce sales have fueled the strong industrial real estate market nationwide

National /
Oct.October 11, 2018 11:00 AM

(Credit: iStock)

The growth of e-commerce has been a boon for industrial landlords and investors across the U.S., fueling demand for warehouse and logistics space that has reached an 18-year high.

The third-quarter industrial availability rate — which measures properties that are vacant or about to be — stood at 7.1 percent, according to a new CBRE tally, the Wall Street Journal reported. That marks 33 straight quarters of falling vacancy rates.

The last time the vacancy rate was lower was at the start of the new century, when it reached 6.6 percent.

Even as nearly 50 million square feet of inventory was delivered across the country from July through September, the shrinking availability rate shows distribution and e-commerce fulfillment operations are occupying space as quickly as it is being built, CBRE said.

“The underlying story is a really strong consumer economy,” Richard Barkham, global chief economist at the firm, told the Journal. “But we’ve also got this big structural shift, which is the growth of e-commerce.”

The impending holiday season has led companies to push more goods through distribution networks, adding to the need for places to store and transfer cargo. Importers rushing to beat U.S. tariffs has contributed to the surge in recent months, with the National Retail Federation reporting soaring import volumes in the past three months.

An earlier report from CBRE showed the Inland Empire area around Los Angeles and the Chicago region were among the go-to places for industrial and logistics lease signings. Southern California tallied 11.6 million square feet of deals signed, followed by Atlanta at 7 million square feet, Chicago at 6.8 million square feet, Pennsylvania’s Interstate 78/I-81 corridor at 6.8 million square feet and Dallas-Fort Worth at 5.2 million square feet.

In New York, the price per square foot for industrial properties rose as much as 81 percent in some parts of the city this year.

And in Chicago, the demand for industrial properties has approached record levels. Through September, the local industrial market saw $2.8 billion in investment sales, which is $447 million ahead of the total at the end of September 2017, according to a Newmark Knight Frank study. [WSJ] — John O’Brien


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