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U.S. Industrial Availability Rate Declines, 34 Straight Quarters
The availability rate for U.S. industrial real estate declined by 8 basis points in Q4 2018, while demand for warehouses exceeded the delivery of newly-constructed supply by roughly six million square feet, according to a new report from CBRE.
Availability of U.S. industrial real estate dipped to 7% in the fourth quarter, the lowest point since 2000. That marks 34 consecutive quarters of declining availability, the longest since CBRE started tracking the data in 1988.
Preliminary data shows that net absorption across the 55 markets tracked by CBRE amounted to 63 million square feet in the quarter, outpacing construction completions of roughly 57 million square feet.
CBRE Global Chief Economist Richard Barkham says, “Construction has picked up, but the long-term demand drivers of e-commerce and the strong U.S. economy have more than offset that supply gain. While factors such as higher interest rates and trade-protection worries are headwinds, the U.S. industrial real estate market will continue to draw momentum from the healthy U.S. labor-market, brisk import activity aided by the strong dollar and robust consumer confidence.”
The gap between demand for warehouses and newly-delivered supply narrowed in the fourth quarter to 6.2 million square feet, down from 9.3 million square feet in Q3. However, quarterly data can be volatile. On a full-year basis, demand exceeded supply by 29 million square feet in 2018.
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