CBRE report: Demand for newer, Class A industrial space in the U.S. is outpacing supply, encouraging more build-to-suit and speculative development activity across the U.S.

Development Largely Concentrated in Tier-One Distribution Markets in South and West Big-Box Distribution Centers Represent Two-Thirds of Expected Deliveries Over Next Four Quarters

Los Angeles, 2014-9-25— /EPR Retail News/ — Demand for newer, Class A industrial space in the U.S. is outpacing supply, encouraging more build-to-suit and speculative development activity across the U.S., according to the latest report from CBRE Group, Inc., Where Are the Big Boxes? The State of U.S. Industrial Development Activity. Much of this demand stems from the rapidly growing e-commerce sector, which is actively seeking large, big-box distribution centers near major metropolitan areas and distribution hubs to speed up delivery times.

“Despite the warming economic conditions, the amount of new supply that has been added to the market since 2010 is well below the levels seen during previous expansionary periods, as developers have been cautious over the past few years,” said Scott Marshall, Executive Managing Director, Industrial Services, Americas, CBRE. “However, as availability rates continue to fall, higher rents will incentivize developers to commission more new projects.”

Development activity has steadily increased every year since the beginning of the recovery cycle in 2010, when only approximately 7 million sq. ft. of new supply was added per quarter. By Q2 2014, the U.S. industrial market was delivering more than 25 million sq. ft. per quarter. However, completion levels remain well below historical averages. Prior to the recession, around 50 million sq. ft. of new industrial space per quarter was added to the market, approximately twice the levels seen during the first half of 2014.

Development activity has been largely concentrated in tier-one distribution markets in the South and West. In Q2 2014, six markets—Dallas/Ft. Worth, Houston, Phoenix, Chicago, Columbus and the Inland Empire—accounted for more than 61 percent of the nation’s total construction deliveries. Overall, markets that have strong industrial fundamentals and solid infrastructure near ports, like Inland Empire, Dallas/Ft. Worth and Houston, have been expanding their industrial footprints more quickly than the national average.

Of the 125 million sq. ft. of new supply expected to deliver over the next four quarters, 67 percent is located in just 10 markets, including Chicago, Dallas/Ft. Worth, Baltimore and Indianapolis. One common theme among these markets is that they are all critically important for managing the import and distribution of goods throughout the nation’s supply chain.

Big-box distribution centers (350,000 sq. ft. and greater) represent around two-thirds of all new industrial facilities expected to be delivered between Q3 2014 and Q2 2015. This focus is chiefly due to the optimization of supply chains to meet increasing demand from e-commerce users, a trend the report expects to continue throughout the coming years.

CBRE report Demand for newer, Class A industrial space in the U.S. is outpacing supply, encouraging more build-to-suit and speculative development activity across the U.S

To request a copy of the report or to speak with a CBRE expert, please contact Robert McGrath (212.984.8267 orRobert.McGrath@cbre.com) or Corey Mirman (212.984.6542 or Corey.Mirman@cbre.com).

About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2013 revenue).  The Company has approximately 44,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through approximately 350 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.

For Further Information:

Robert Mcgrath
Director, Sr
T +1 212 9848267
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Corey Mirman
Specialist, Sr Communication
T +1 212 9846542
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