News — Industrial Market Shows Continued Expansion

December 10, 2014

The nation’s industrial real estate market showed continued success during the third quarter, continuing an expansion that’s lasted for more than four years, according to reports from analytics firm Reis and commercial real estate firm CBRE, MBA NewsLink reported Dec. 4.

“We are recording continued improvement in occupancies for both warehouse/distribution and Flex/R&D properties across the nation, a hopeful sign that suggests that this particular sector is reaping benefits not just from domestic economic activity but also an improving world economy, slow going though it might be,” Victor Calanog, chief economist for Reis, told MBA NewsLink.

Analysts at CBRE reported in their Industrial Marketview report that national availability — meaning space that’s actively marketed and available for tenant build-out within 12 months — in the industrial market sector dropped 20 points during the third quarter, marking the 18th consecutive quarter of growth.

Decreased availability of industrial space resulted in steady rent increases and a 2.8 percent increase in effective revenue-per-square-foot compared to the same point last year. Top-performing markets reported growth of 6 percent or more, while moderate gains were reported in even the lowest-performing markets.

“This suggests that industrial fundamentals, at least for warehouse/distribution properties, are enjoying a relatively broad-based recovery, not just limited to coastal markets or hubs of trade like Los Angeles,” Calanog told MBA NewsLink.

Two key factors helping boost the industrial sector are falling energy costs and growth in e-commerce, which has led manufacturers to depend upon coast-to-coast distribution centers to meet demand.

Analysts at CBRE reported that such demand led developers to put more than 100 million square feet of industrial space under construction — and the door is open to additional development.

“Over the longer term, industrial real estate fundamentals will remain strong, as the sector is uniquely positioned to benefit from current economic trends including increased trade growth, inventory rebuilding and increased industrial output,” CBRE stated in its report, MBA NewsLink reported.

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