US Warehouse Market Primed for Solid 2014

According to analysis presented at the State of the U.S. Industrial Market 2013 Review and Forecast by CoStar Director of Industrial Research Rene Circ and Senior Real Estate Economist Shaw Lupton, demand for U.S. warehouse space not only exceeded expectations in the final quarter of 2013 but is poised for even stronger performance over the next 12 months with early demand and vacancy rates falling to levels not seen since the early 2000s. CoStar recorded net absorption of 58 million square feet of warehouse/distribution space within the 210 largest U.S. markets. Meanwhile, the 45 million square feet absorbed in the top 54 markets ranks as the sixth-highest quarterly reading on record -- and by far the strongest reading since the beginning of the recovery.

"Right now, we're seeing vacancies on a national level lower than the entire period of the last cycle," said Rene Circ, director of industrial research. "You have to go back to before the bursting of the Internet bubble in the early 2000s to see vacancies for U.S. industrial space below that 7.6% number."

"Modern space with proximity to population centers and a robust logistics infrastructure will dominate the industrial real estate sector in 2014," said Craig Meyer, president of industrial brokerage at JLL, who attributed 40% of current big-box industrial requirements as directly related to e-commerce -- a sector that’s growing globally by 20% annually as retailers develop new real estate models to support their omni-channel logistics models.

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