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Industrial real estate demand continues to surge

NEW YORK – Oct. 21, 2016 – The need to keep e-commerce inventory on hand is driving a surge in demand for U.S. warehouse and distribution center space, which has tightened for the 26th consecutive quarter, according to real estate services firm CBRE.
In a new report, CBRE said rents are expected to rise as companies add big-box distribution centers near large population clusters, and reverse-logistics facilities for processing returned merchandise.
The industrial market continues to draw momentum from e-commerce, as hefty flows of goods stream into the U.S., the world’s largest consumer economy, and online sales claim a steadily growing portion of overall retail sales, CBRE said.
The growth of e-commerce fulfillment has created a need for intermediate warehouses on the periphery of metropolitan areas where containers and vans are unloaded and the contents are divided into packages for delivery to customers.
The largest declines in availability were recorded in Memphis, Detroit, New York, Tampa Bay, Boston, and Philadelphia. The Memphis, Los Angeles, Pittsburgh, Raleigh, South Central Pennsylvania and Orange County, California, markets posted their lowest availability in decades.
Availability increased the most in Denver, Houston, Cincinnati, and Riverside, California, largely due to construction of new warehouses and distribution centers, CBRE said. Availability includes space occupied but listed for lease, while vacancies are only empty space.
The low availability of industrial real estate space has many shippers now looking for locations adjacent to major metropolitan areas to house their operations. For example, industrial developers are looking to eastern Pennsylvania as the place to build their big-box DCs to serve the densely populated region stretching from New York to Philadelphia.
Indianapolis, a metropolitan area in its own right, is another example of this phenomenon because of its proximity just three hours from Chicago. Availability in the Indianapolis region fell 1.6 percentage points in the third quarter from a year earlier. Phoenix, because of its proximity to the border, NAFTA trade, and markets in Southern California, also fits into this category. Availability there was down 1.3 percentage points year-over-year.
Although the market is hot, CBRE expects it to begin to cool toward the end of 2018 as 173 million square feet of industrial developments come online in 2016, followed by 172 million square feet in 2017.
The industrial market is forecast to remain healthy for the next several quarters as the fundamentals move closer to equilibrium, said Jeffrey Havsy, CBREs chief economist in the Americas.
Copyright © NNA 2016 LEBANON. Provided by SyndiGate Media Inc. (
Source: Florida Realtors Feed

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