The availability of warehouse space in the U.S. last year hit the lowest level since 2000 and will remain tight this year as e-commerce continues to boost demand for storage and distribution facilities, especially near heavily populated areas.
Real estate brokerage CBRE reported that only 7 percent of industrial space was vacant and available in the fourth quarter, the lowest level since 2000.
Demand for industrial space exceeded supply by about 6 million square feet in the fourth quarter and by 29 million square feet throughout 2018, according to CBRE.
“Demand is not slowing,” Richard Barkham, global chief economist and head of research for the Americas at CBRE, told the Wall Street Journal.
Developers delivered 57 million square feet of newly built warehouse space nationwide in the fourth quarter, 6 percent more than in the third quarter, CBRE reported
Signs of a slowing U.S. economy have emerged. The growth of manufacturing decelerated in December, and some measures of business activity in the service sector of the economy declined.
Yet consumer confidence is still strong, and the recent holiday shopping season was one of the best in years for such retailers as Target, which has experienced rapid growth in online sales.
Real estate brokerage JLL reported that the market for industrial space probably will “hit the pause button in 2019” as the pace of economic growth slows and disruptions in international trade alter supply chains.
That could provide some relief to tenants after a long period of industrial-space scarcity, according to JLL. New construction also could add to the availability industrial space this year and reduce the growth in rents. [Wall Street Journal] – Mike Seemuth