National CRE News In Your Inbox.
Sign up for Connect emails to stay informed with CRE stories that are 150 words or less.
Fast Absorption of New Industrial Tempers Concerns About Oversupply
Developers completed construction of 289 million square feet of industrial and logistics real estate across the U.S. in 2019, but only 39% of space in new construction was available, thus tempering any concerns about oversupply. That’s a major factor in vacancies staying near all-time lows in 2019, CBRE says in a new report.
Although deliveries outpaced the 255 million square feet of new absorption nationwide, supply and demand dynamics remain healthy, CBRE says. A vacancy rate of less than 50% is considered healthy for newly delivered industrial properties, and the top five markets with deliveries of greater than four million square feet had vacancies considerably below that threshold.
Among the top five, Kansas City finished 2019 with the lowest overall vacancy rate for 2019 construction completions at 7.3%. It was followed by Miami, Baltimore and Greenville, SC, all with vacancies under 20% for newly-constructed product. Rounding out the top five was Northern/Central New Jersey with vanacies of 22.2% for newly-delivered product.
Dallas/Ft. Worth was the best-performing core market last year, with nearly 75% of its 25 million square feet in new completions already leased, the report says.
Another 309 million square feet currently under construction is already 33% preleased, says CBRE. More than half of the under-construction totals in Charlotte, Cincinnati, Miami, Savannah and St. Louis are committed.
Nine submarkets account for 16.3% of the space currently under construction, including North Ft. Worth and South Atlanta—each with more than nine million square feet in the pipeline.
Other submarkets with high levels of new construction in recent quarters include Northeast Atlanta, Ontario, CA and Southeast Houston. “These submarkets are within core markets with huge demand for modern distribution space, which is expected to continue in 2020,” according to CBRE’s report.
Pictured: NorthPoint 90 Logistics Center, now under construction in Houston.
Connect Industrial Midwest is coming to Rosemont, IL on March 4. For more information, or to register, click here.
For comments, questions or concerns, please contact Paul Bubny
- ◦Development
- ◦Lease
