Industrial rental rates nationwide rose 9 percent last year, according to Prologis Inc., the biggest owner of industrial real estate in the world.
In an international report on rental rates for logistics facilities, Prologis found that industrial rents grew faster last year in the United States than in the rest of the world.
Domestic industrial rents have risen 25 percent during the last three years, Prologis reported, citing U.S. economic growth and few industrial vacancies in such logistics markets as South Florida and Atlanta.
A lack of available land for large warehouses has restrained industrial real estate development in Los Angeles, San Francisco, New Jersey and South Florida.
Demand is increasing for warehouses that facilitate fast deliveries to electronic-commerce shoppers. But the cost of newly built industrial buildings, or “replacement cost,” is rising nationwide, Chris Caton, head of research at Prologis, told the Wall Street Journal.
“I think replacement costs are definitely going to be the story of 2016,” he told the Journal.
According to the Prologis report, industrial rents nationwide will rise 5 percent to 10 percent this year. Tenants that renew multi-year lease agreements could face rent hikes up to 20 percent, compared to the previous lease. [Wall Street Journal] – Mike Seemuth