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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Warehouse Demand Off to Strongest Start Since 2008

A new article from CoStar titled Don't Look Now But Warehouse Demand Off to Strongest Start Since 2008 has been released, noting the strong start of the warehouse market in 2013 as the growing pace of construction remains in check with a demand for growth. A survey of transaction data by CoStar's Property & Portfolio Research shows warehouse supply and demand at its strongest levels in at least five years. An excerpt from the article follows:

"Speculative new construction is still not a threat to the ongoing recovery as it is still heavily concentrated in markets that also have strong demand, such as the Inland Empire, Phoenix, and more recently Memphis," said Rene Circ, director of U.S. research/industrial Property & Portfolio Research (PPR), a CoStar company.

"The industrial market is enjoying a recovery in line with historic trends," said Robert Bach, national director of market analytics for Newmark Grubb Knight Frank. "The leasing market is performing better than the investment market, only because it’s harder for investors to source industrial product to match their appetites."

"Housing has emerged from its recessionary slump and is once again driving demand for both warehouse and flex product," said Jason W. Tolliver, vice president of research, Cassidy Turley. "The manufacturing sector continued to expand in the first quarter, although the pace of growth seems to be slowing. Despite this, factory hiring has continued and this bodes well for future CRE demand."

For more news and information visit Blumberg Capital Partners.