Q2 Industrial: Low Vacancy, High Absorption, Continued Demand

The industrial sector continued to be an incredibly strong commercial real estate sector. According to Q2 2019 figures released by various firms, vacancy remained at historically low rates in the face of constrained supply and continued positive absorption.

The CBRE industrial report indicated that, despite concerns over continued global trade tensions, “demand for logistics space remains strong overall, as e-commerce, food & beverage and home improvement companies continue to drive lease activity.” Researchers with NKF added that absorption did slow, mostly because of a lack of new supply. Cushman & Wakefield analysts agreed, noting that tight space was a continual driver in asking rent increases.

In terms of outlook, the three companies indicated that above-average growth will likely be sustained for the remainder of 2019. Noted NKF: “Robust leasing activity, along with the continued expansion of e-commerce, suggest sustained market growth . . .,” while CBRE added that a continued strong U.S. dollar and continued consumer activity will “likely generate more demand for imports, which is positive for the (industrial and logistics) sector.” Meanwhile, Cushman & Wakefield’s outlook noted that rental rates will continue appreciating, though “rent growth will slowly decelerate” with “year-over-year growth in asking rents of 4.8% in 2019 and 3.6% in 2010.”