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Industrial Remains “White Hot”
The explosive growth of e-commerce and strong port volume continues to fuel demand for the Inland Empire’s industrial markets. TEU volume through November 2017 was on track set records for total volume in a calendar year, with container volume at the combined Long Beach and Los Angeles ports hitting 15.41 million.
The Inland Empire leads the nation in both industrial leasing and development activity with 42.6 million square feet leased and 25.2 million square feet under construction at the end of 2017, according to Cushman & Wakefield, which forecasts the Inland Empire will lead the nation in net demand from 2017 to 2019.
NKF’s Q4 2017 industrial report shows that net absorption was nearly even with new supply, at 19.8 million square feet, which caused vacancy to be flat relative to 2016. Though NKF also noted net absorption was positive for the eighth consecutive year, while rent increased for the seventh (up 5.2%). Two large absorption gains in 2017 came via Wayfair’s 1.2 million square feet and Amazon’s 614,848 square feet.
Lee & Associates reports vacancy rates increased slightly in the fourth quarter to 5.72%. Though it notes average asking sales prices per-square-foot increased in Q4 with the supply of buildings offered for sale remaining limited. Yet, actual sales prices declined over the previous quarter, primarily due to the quality of buildings sold.
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