Supply of newly built warehouses, distribution centers slightly exceeded demand for much of 2017
Los Angeles - Availability held steady in the U.S. Industrial & Logistics market in the fourth quarter as expanding new supply caught up to strong demand, according to a new report from CBRE.
The availability rate across 51 markets tracked by CBRE remained relatively flat at 7.4 percent, registering an increase of 2 basis points (bps) for the quarter. For the year, availability increased by 4 bps. The national availability rate remains near its lowest point since 2000.
The flattening out of the market’s availability rate follows several years of steady declines as voracious demand for warehouses and distribution centers dramatically outpaced new supply. In recent years, the wide supply-demand gap hindered demand as some users couldn’t find available space that met their needs as they expanded their networks for e-commerce distribution.
That gap finally narrowed and closed last year. In the fourth quarter, developers delivered 52 million sq. ft. of new warehouses while users moved into 44 million sq. ft.
“This equilibrium in the market will benefit industrial users, who should find a few more options in various markets for their expansion needs,” said Richard Barkham, CBRE Global Chief Economist. “The underlying conditions for this sector remain decidedly healthy, with demand still robust and the supply pipeline vibrant.”
Of markets tracked by CBRE, 28 registered declines in industrial availability in the fourth quarter, 24 notched gains and 13 remained flat. The largest declines came in Tucson (down 260 bps), Cincinnati (down 200 bps), Sacramento (down 160 bps) and Salt Lake City (down 120 bps). The largest increases came in Wilmington, Del., (up 470 bps), Austin (up 250 bps) and Charlotte (up 170 bps).