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The Real Deal Los Angeles

Industrial vacancies nationwide hit all-time low: report

Rent growth outpaced other commercial sectors for the first time
April 19, 2018 01:00PM

Warehouse (Credit: Wikimedia Commons)

Industrial vacancy hit an all-time low across the U.S., as rent growth outpaced other commercial real estate sectors.

The vacancy rate hit 7.3 percent last year down from 8.1 percent in 2016, according to a report by online real estate trading platform Ten-X. The firm predicts the industrial market will tighten up slightly more this year on the back of 10 million square feet of net absorption.

The report found 2017 was the first year that industrial rent growth led other sectors, and the sixth straight year that rent growth accelerated, according to Real Estate Weekly.

California metro markets including Los Angeles, San Jose, and San Francisco are all ripe for investment, according to the report, partially because of strong demand from the cloud computing and legalized cannabis industries.

More broadly, the shift toward e-commerce has pushed up demand for warehouse, data centers and distribution space.

Ten-X determined that owners of industrial properties in cities including Dallas, San Antonio, Cleveland, and Baltimore should look to sell because of high supply and weak fundamental growth drivers.

Looming tariffs proposed by President Trump could negatively impact the industrial sector, according to Real Estate Weekly. Trump’s proposed tariffs on foreign steel and aluminum have already had an impact on the construction industry, which relies heavily on the former.  [Real Estate Weekly] — Dennis Lynch