Cargo Business Newswire

Monday, April 21, 2014

Industrial real estate market performance up in first quarter

The U.S. industrial real estate market made good progress through the first quarter of 2014, according to commercial real estate services firm Cushman & Wakefield, whose latest research findings indicate robust absorption, declining vacancies and rising rental rates.

The firm said although tightening supply slowed leasing through the first quarter ending in March, the country's industrial construction sector has increased activity to meet stronger demand.

"Domestic manufacturing continues to gain traction, driving increased production and shipments, and electronic fulfillment continued to expand," said Cushman & Wakefield's John Morris, head of industrial services for the Americas. "As a result, the economic environment for our sector is the best we have seen in many years."

Industrial space occupancy gains rose 31 percent year-over-year, with 30.5 million square feet of absorption, compared to 23.2 square feet in the first quarter of 2013.
Atlanta led the nation, with 5.1 million square feet of absorption, followed by California's Inland Empire, with 4.6 million square feet. The U.S. industrial vacancy rate ended the quarter at 7.4 percent, 80 basis points lower than a year ago.

"Availabilities are dwindling, especially in the highly competitive big-box market," Morris noted. "This is holding industrial leasing in check. Only 11 out of the 38 markets tracked by Cushman & Wakefield posted increased activity year-over-year."

Los Angeles continued to lead the nation in leasing volume, with 7.7 million square feet in activity through March, followed by Dallas/Fort Worth, with 6.8 million square feet.

Average rent grew in most major markets tracked by Cushman & Wakefield, with the national direct average rising from $5.73 per square foot to $6.03 per square foot over the past year.

"Moving forward, we are watching a number of private sector developments that will likely add near-term momentum to the industrial real estate market's positive trending," Morris said. "Among them, we anticipate a continuing revival of the housing sector, the activation of pent-up consumer demand and rising export volume. Most importantly, we are beginning to see a shift in business attitudes and a greater willingness to take risk, which will lead to stronger employment growth and increased investments in people and equipment."