Decline in Available Space Comes Amid Strong Demand, Temporary Slowdown of Construction Deliveries
Los Angeles, 2017-Jul-15 — /EPR Retail News/ — The average availability rate for warehouses and distribution centers in the U.S. declined slightly in the second quarter, aided by the healthy economy and fewer than expected construction completions, according to a new report from CBRE.
U.S. industrial availability declined by 10 basis points (bps) in the second quarter to 7.8 percent, its lowest level since the first quarter of 2001. The decline was the market’s 27th in the past 28 quarters.
The slight tightening of the market in the second quarter can be attributed to strong demand and a temporary slowdown in new supply. The U.S. industrial market has benefited from general strength in the economy, notably gains in job growth, port traffic, increased e-commerce activity and key manufacturing indices.
Additionally, developers completed less industrial space in the second quarter (40.2 million sq. ft.) than was expected (46.5 million sq. ft.), according to CBRE.
“This bounceback in demand from a sluggish first quarter isn’t surprising, given the solid economic growth that we’ve seen this year,” said Jeff Havsy, CBRE Chief Economist in the Americas. “New construction deliveries are expected to pick up in the second half of the year since the pipeline of new projects is active.”
CBRE defines availability as the full amount of space available for lease, including vacant space and currently occupied space being marketed for occupation by other users.
In the second quarter, 42 of the U.S. markets that CBRE tracks registered declines in their industrial availability rates. Fourteen registered increases. Six were unchanged.
Markets posting the largest declines in availability in the second quarter from a year earlier include Wilmington, Del., (down 370 bps); Dayton, Ohio, (down 320 bps); Jacksonville (down 230 bps), Cincinnati (down 220 bps); Sacramento (down 210 bps); and Boston (down 200 bps).
Markets posting higher availability rates from a year ago include Austin (up 280 bps); Kansas City (up 130 bps); Fort Worth (up 120 bps); San Jose (up 100 bps); and Houston (up 90 bps).
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 (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
SOURCE: CBRE Group, Inc.