Giant Warehouses Deliver, Absorption Ticking Down
E-commerce has driven demand for warehouses and distribution centers sky-high. And in Q4 2016, developers delivered warehouses totaling nearly 25.5 million square feet, according to Colliers International metrics. But net absorption for the space fell by 19.3% year over year, with vacancy rates nationwide at 7.7%. In the final quarter of 2015, vacancy stood at 7.5%.
The warehouse market appears to be reaching equilibrium, following years of demand fast outstripping supply, according to James Breeze with Colliers. “I expect that demand to continue, but whether it will keep increasing at record levels, the capacity may not be there for such robust growth,” he told the Wall Street Journal. “For 2017, I would expect the same amount of activity, but not growing beyond what we have seen.”
The Colliers report also indicated that much of the warehouse space was being built on spec.
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