Six Core Industrial Markets See Lower Vacancy Rates, Higher Rents In First Half Of 2016
The high demand in industrial real estate has boosted rents and lowered vacancy rates, according to a recent Colliers International report.
“The modernization of the supply chain has brought about demand we’ve never seen before," Colliers national director of industrial research James Breeze tells Bisnow. “As long as we have [strong] job growth, and both consumer confidence and consumer spending are positive, then I don’t see anything in the near future that will stop the demand that we’ve been seeing.”
Demand has risen in six core industrial markets in particular—see how they fared in the first half of 2016.
Retail and wholesale are driving demand in Atlanta, pushing leasing and absorption up with rents reaching a post-recession high of $3.02/SF.
E-commerce expansion is to thank for Chicago's growth. Big-box construction has continued to increase—11.7M SF of modern facilities were under construction in Q2.
Colliers says new development in DFW will be boosted by activity from 30M SF of active tenants. "Dallas continues to have robust growth because of its central location, large population and abundance of available land," James tells us.
The greater Los Angeles area added a record-breaking 45 big-box locations, or 22.8M SF, to its inventory within the past year. The area now boasts 676 big-box locations, or more than 370M SF. This is the most in North America.
This combined market emerged as one of the most robust in the country this year, thanks to demand from logistics and e-commerce users. Big-box leasing more than doubled within the past year, and 18.4M SF was leased in the first half of this year alone.
Though there was a slowdown in Toronto, construction activity continues to grow and bullish developers have just under 6M SF of big-box space under construction. "I foresee development plateauing in core big-box developments, I don't see it expanding," James says.
